project & infrastructure finance awards
FINANCING TYPE AND SIZE: term loans financing package of approximately $658 million
LOCATION: 254 km toll road connecting Cañasgordas and NecoclÃ, Province of Antioquia
BANKS: SMBC; China Development Bank, Shandong Branch; Financiera de Desarrollo Nacional
LAW FIRMS: Appleby; Brigard Urrutia; Clifford Chance; Conyers Dill Pearman; Cuatrecasas; Holland & Kinght; Junhe LLP; Paul Hastings; Tian Yuan Law Firm
SUPPORT: Control Risk; Credicorp Capital; Delima Marsh; ECCO - Estudios Contractuales S.A.; Delima Marsh; Global Loan Agency Services Limited; Steer Davies Gleave Limited
Landing a project of the size and importance of Colombia’s Autopista al Mar 2, a 254 km toll road that connects Cañasgordas, north of MedellÃn to Necoclà on the Caribbean coast is an achievement in itself. However, no deal is ever smooth sailing, and in this case, implementing unprecedented currency hedges and a last minute change of legal jurisdiction made it that much more difficult.
The project sponsors, a consortium led by China Harbour Engineering Company that also included SP Ingenieros SAS, Unidad de Infraestructura y Construcciones Asociadas SAS, and Termotécnica Coindustrial SAS, closed on financing of approximately $658 million.
Concerned about the rising trade tensions between the United States and China, a late change from a US legal jurisdiction to one governed by British law, added more pressure on all participants to get the job done in time.
Autopista al Mar 2’s project leader at CHEC, Guimin Rong, in written answers to questions from LatinFinance, said one of the main challenges was the extensive requirements of the two development banks, Financiera de Desarrollo Nacional of Colombia and China Development Bank Shangdong Branch, to meet compliance and anti-money laundering clauses.
“Only this issue took us around 7 months in negotiations and auditing procedures,†he said.
“In addition, the escalation of trade tensions between the United States and China, where due to this last factor and the international nature of the transaction, including parties located in different jurisdictions like China, US and Colombia, suddenly, when we were already had almost all of the financing documents ready to be signed, at the request of one of the parties, in a record time we had to change the applicable jurisdiction of the USD tranches, initially based on NY law, to English law, which implied modifying the financing documents and changing the corresponding agents and counsels, in accordance with the said jurisdiction,†Rong said.
Included in the financing package were two currency hedges. The first is a $150 million 12-year hedge and another $84 million 16-year hedge for covering revenues sources in Colombian pesos and payment in US dollars.
“This is unprecedented in the entire Latin America region. No other deal has done a FX derivative for these amounts for such a long period of time,†CHEC wrote.
The project was the first PPP (public private partnership) project developed in Colombia by CHEC, Rong said, adding that he believes it will serve as a benchmark for other Chinese companies entering the region.
In October 2019, CHEC’s position was strengthened in Colombia with the awarding of the contract to build a metro in the capital, Bogota. The consortium of CHEC, Xi’an Metro Company and Bombardier of Canada, won the reported $4 billion contract to build the 24 km (15 mile) line within a 7-year timeframe.
CHEC has ongoing projects in Mexico, Chile, Panama, and Jamaica, in addition to Colombia.
“Currently we see greater potential for investment in infrastructure sector in Colombia, Peru, and Mexico due to the stability and maturity of the market, and we are committed to expand our business, specially in Colombia as it represents a strategic market for CHEC,†Rong said.
All supporting financial institutions and law firms were transmitted to LatinFinance by the award category winners. For updates please email awards@latinfinance.com
