August 5, 2021
Garrigues advises Metro de Lima on US$961 million financing packages for Lima Metro Line 2 Project
Garrigues advised Metro de Lima Linea 2 on a set of financings packages for the Lima Metro Line 2 Project, in an aggregate amount of US$961 million. These packages consisted in (i) a US$811 million off-balance sheet Export Credit Agency backed-financing, and (ii) an amended and restated US$150 million Revolving Construction Facility. Both financings are backed by Peruvian government payments under the Lima Metro Line 2 Project and closed days apart.
Lima Metro Line 2 is one of the most ambitious infrastructure projects launched in Latin America under a PPP structure. Under the 35-year concession agreement, 35 km of subway lines will be built, with a total investment of approximatively US$ 5.5bn.
Peru employs a unique financing mechanism to minimize construction risk for the Lima Metro Line 2 Project, called RPI-CAOs. These are government-backed milestone-linked receivables that represent the payment obligations of Peru’s Ministry of Transport and Communications. Each RPI-CAO makes available 60 quarterly payments for a period of 15 years to the Project, upon achievement of defined milestones, and will be used to repay lenders under both facilities.
KEY HIGHLIGHTS:
A. ECA-Backed Facility:
The Facility is covered by an export credit guarantee provided by SACE, the Italian Export Credit Agency. The syndicated loan was provided by a set of European banks to a special purpose vehicle, which will purchase the RPI-CAOs from Metro de Lima using funds disbursed by lenders. The Facility is one of the only RPI-CAO financings covered by an Export Credit Agency and is the largest RPI-CAO deal ever financed under a loan format in Peru.
Borrower/RPI-CAO Purchaser: Lima Metro Loan RPl-CAO Purchase LLC.
Lenders: Cassa Depositi e Prestiti, KfW IPEX-Bank, Société Générale, Banco Santander, and Instituto de Crédito Oficial – ICO.
Export Credit Guarantee Provider: SACE.
RPI-CAO Seller: Metro de Lima Línea 2 S.A.
Sponsors: Iridium, Vialia, Cosapi, WeBuild and Hitachi Rail.
Administrative Agent: Société Générale.
Offshore Collateral Agent: Société Générale.
Project Trustee: Citibank del Perú.
Financial Advisor: Santander and Goldman Sachs.
Deal Value: USD811,000,000.
- 1 -
Closing Date: July 30, 2021.
B. Revolving Construction Facility:
The Facility consisted in an amendment and restatement of an existing facility signed in 2019, which was restructured and extended by the parties. Funds will be disbursed by Lenders to the Borrower upon the latter reaching certain construction milestones under the Lima Metro Line 2 project, which repayment is backed by payments to be made by Peru’s Ministry of Transport and Communications.
Borrower: Metro de Lima Línea 2 S.A.
Lenders: BBVA, Banco de Sabadell, and Banco Santander, S.A.
Administrative Agent: BBVA.
Deal Value: USD150,000,000
Closing Date: July 27, 2021
Collateral: Pledge over cash and rights of the Borrower.
ADDITIONAL INFORMATION:
Garrigues Partner Oscar Arrus was quoted as saying “As most project finance structures, it has definitely been a challenge to close both transactions simultaneously. They were full of interesting complexities that will allow the project company to diversify its funding mix.”
Garrigues Partner Diego Harman also stated: “These transactions reaffirms the strength and recognition of Peruvian PPP projects, highlighted by the support of Lima Metro Line 2 by international lenders. The fact that both deals closed days after the recently elected president in Peru took office demonstrates that this and other projects in the country will continue moving forward.”
LEGAL COUNSEL INVOLVED:
A. ECA-Backed Facility:
o Peruvian Counsel to the Borrower, Metro de Lima Línea 2 and the Sponsors: Garrigues. . Partners: Oscar Arrús and Diego Harman; Senior Associate: Miluska Gutierrez Vega; Associate: Isabella Barba.
o New York, Spanish and Italian Counsel to the Borrower, Metro de Lima Línea 2 and the Sponsors: Latham & Watkins. . Partner: Gianluca Bacchiocchi; Associates: Alejandro Espitia, Fernando Castillo and Andrew Turk.
o New York and Dutch Counsel to the Lenders: Norton Rose Fulbright. . Partners: Daniel Spencer, Kim Caine, Kenneth Hansen, Arturo Sferruzza, Bart Le Blanc; Counsel: Jose Cobeña; Associates: Cameron Dumans Royse, Frances Hoogenberg.
- 2 -
o Peruvian Counsel to the Lenders: Rodrigo, Elías & Medrano Abogados. . Partners: Fernando Molina and Efraín Salazar; Associate: Ana Sofía Restrepo.
o Peruvian Counsel to the Project Trustee: Estudio Echecopar. . Partner: Juan Carlos De Los Heros; Associate: Fernando Sam.
B. Revolving Construction Facility:
o Peruvian Counsel to the Borrower: Garrigues Peru. . Partners: Oscar Arrús and Diego Harman; Senior Associate: Miluska Gutierrez Vega; Associate: Isabella Barba.
o Peruvian Counsel to the Lenders and the Administrative Agent: Rodrigo, Elías & Medrano Abogados. . Partners: Fernando Molina and Efraín Salazar; Associate: Ana Sofía Restrepo.
About Garrigues:
Operating in 13 countries and with 32 offices throughout the world, Garrigues is one of the largest international law firms and has been working in Latin America for more than 40 years, with a long history in Peru. The firm is now growing its Latin American legal practice by rolling out a network of own offices which constitutes one of the major direct presences in Latin America, with offices in Colombia, Peru, Mexico, Chile and Brazil.
Garrigues has been named Law Firm of the Year: Andes by LatinFinance 2020; Andean states banking & finance firm of the year by IFLR Americas Awards 2021 and Latin American Local Legal Adviser of the Year at the 2021 and 2019 IJGlobal Awards.
For further information about this release please contact Patricia Wallace ([email protected]) or Blanca Remirez De Ganuza ([email protected]).
- 3 -