First operational 4G toll road in Colombia gets refinancing

14 January 2021

Clifford Chance LLP in New York and Washington, DC, Garrigues (Colombia), Mendoza Abogados in Bogotá and Philippi Prietocarrizosa Ferrero DU & Uría (Colombia) have helped a group of local and international lenders provide a US$543 million refinancing to Colombia’s first completed 4G toll road project.

The borrower is a group of concession-holders, consisting of the local subsidiary of Central American construction group Constructora Meco, as well as Colombian counterparts MHC Ingeniería, Pavimentos Colombia and Ingeniería de Vías.

Costa Rican firm Vector Legal Abogados advised Constructora Meco. Milbank in New York and Colombia’s Castro Leiva Rendón are thought to have advised the sponsors, while Reed Smith LLP helped the collateral agent, Citibank, and BLP (Costa Rica) the lenders, but this could not be confirmed prior to publication. The deal closed on 28 December.

The borrowers obtain the refinancing in three tranches.

In the first portion, a group of local lenders provided a credit facility worth 1.2 trillion Colombian pesos (US$345 million). That financing was provided by the local infrastructure fund of US private equity giant BlackRock and a fund managed by Colombian private equity group Alianza, as well as local banks Financiera de Desarrollo Nacional and Banco de Bogotá.

In the second tranche, international lenders MUFG and Sumitomo Mitsui Banking Corporation provided a dollar-denominated facility of US$165 million. In the final portion, Financiera de Desarrollo Nacional provided a liquidity loan of 115 billion Colombian pesos (US$33 million). Liquidity loans are a type of short-term financing, which companies use to preserve their cash reserves and pay for ongoing general corporate expenses, such as salaries and utility bills.

The concession holders will use the majority of the proceeds to refinance existing debt owing to the 190-kilometre Alto Magdalena toll road, which connects the central Colombian provinces of Caldas, Cundinamarca and Tolima. The Alto Magdalena route, also known as the Honda – Puerto Salgar – Girardot road, is part of Colombia’s ambitious nationwide 4G programme, which is aimed at improving the country’s road network.

The Alto Magdalena motorway recently became the first 4G project to begin operations and was unveiled by President Iván Duque in July last year. Over 4,000 jobs were created by the project, which also received a total of 1.95 trillion Colombian pesos (US$557 million) in investment before its completion. The construction of Alto Magdalena was first announced in 2016, when it received a US$356 financing.

The Alto Magdalena route serves around 260,000 Colombians in the central municipalities of Girardot, Beltrán, Flandes, Honda and La Dorada, among others.

Founded in 1977, Constructora Meco is among the largest construction groups in Central America. Along with Colombian assets, it counts infrastructure projects in Costa Rica, El Salvador, Nicaragua and Panama too.

Bogotá-headquartered MHC Ingeniería conducts engineering and civil construction works in Colombia, as does local counterpart Ingeniería de Vías. The fourth sponsor, Pavimientos Colombia, has built and renovated over 3,500 kilometres of roads in the country.

Counsel to Constructora Meco

Vector Legal Abogados

Partner Jessica Salas and associate Gabriela Gomez in San José

Counsel to MUFG Bank, Sumitomo Mitsui Banking Corporation, Banco de Bogotá, Fondo de Capital Privado Deuda Infraestructura Colombia, Fondo de Deuda Senior para Infraestructura en Colombia CAF-AM Ashmore I and Financiera de Desarrollo Nacional

Clifford Chance LLP

Partners Gianluca Bacchiocci and Avrohom Gelber, counsel Greg Kahn, and associates Jacklyn Hoffman, Luis Maria Clouet and Julian Hurtado Vallejo, Tali Lee and Fernando Castillo Villalpando in New York, and partner Megan Gordon and counsel Jacqueline Landells in Washington, DC

Philippi Prietocarrizosa Ferrero DU & Uría (Colombia)

Partner Juan Fernando Gaviria and associates Ana María Ramírez, Daniela Hernández and Angie Gómez in Bogotá

Counsel to BlackRock and Fondo de Capital Privado Deuda Infraestructura Colombia

Garrigues (Colombia)

Counsel Francisco Noguera, senior associate Alejandro Garcia and associate Natalia Durán

Counsel to Financiera de Desarrollo Nacional

Mendoza Abogados

Partner Mateo Mendoza and associates María Beatriz Segura and Christina Burn in Bogotá

Source: LatinLawyer

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