Colombia - Atlantic Railroad Equipment Project : Loan 0267 - Loan Agreement - Conformed

S LOAN NUMBER 267 CO Loan Agreement (Atlantic Railroad Equipment Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND FERROCARRILES NACIONALES DE COLOMBIA DATED SEPTEMBER 20, 1960 S LOAN NUMBER 267 CO Loan Agreement (Atlantic Railroad Equipment Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND FERROCARRILES NACIONALES DE COLOMBIA DATED SEPTEMBER 20, 1960 S 1'hwatt Agre~rtrut AGREEMENT, dated September 20, 1960, between INTER- NATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and FERROCARRILES NACIONALES DE COLOMBIA (hereinafter called the Borrower). WHEREAS by an agreement dated August 26, 1952 between the Republic of Colombia (hereinafter called the Guarantor) and the Bank, the Bank agreed to lend to the Guarantor the sum of $25,000,000 or the equivalent thereof in currencies other than dollars to assist in financing the costs of a project included in a program of the Guarantor for the organization of the railway system of Colombia and for the expansion, rehabilitation and improvement of the lines operated by the Consejo Administrativo de los Ferrocarriles Nacionales or its successor organization; and WHEREAS as contemplated by such agreement, the Bor- rower was organized by Decree No. 3129 of 1954 as an autonomous non-political organization to administer the railway system of Colombia on a financially self-supporting basis; and WHEREAS by an agreement dated June 15, 1955 between the Borrower and the Bank, the Bank agreed to lend to the Borrower the sum of $15,900,000 or the equivalent thereof in currencies other than dollars to assist in a further expan- sion, rehabilitation and improvement of the railway system of the Borrower; and WHEREAS the Borrower asked the Bank to finance the foreign currency part of the cost of railroad equipment; Now THEREFORE, the parties hereto hereby agree as follows: S 4 ARTICLE I Loan Regulations; Special Definitions SECTION 1.01. The parties to this Loan Agreement accept all the provisions of Loan Regulations No. 4 of the Bank dated June 15, 1956, subject, however, to the modifications thereof set forth in Schedule 3 to this Agreement (said Loan Regulations No. 4 as so modified being hereinafter called the Loan Regulations), with the same force and effect as if they were fully set forth herein. SECTION 1.02. Except where the context otherwise re- quires, wherever used in this Agreement or in any Schedule hereto, the term '.' Atlantic Railroad " shall mean the rail- way line between Puerto Salgar and Santa Marta. ARTICLE II The Loan SECTION 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in this Agreement set forth or referred to, an amount in various currencies equivalent to five million four hundred thousand dollars ($5,400,000). SECTION 2.02. The Bank shall open a Loan Account on its books in the name of the Borrower and shall credit to such Account the amount of the Loan. The amount of the Loan may be withdrawn from the Loan Account as pro- vided in, and subject to the rights of cancellation and sus- pension set forth in, the Loan Regulations. SECTION 2.03. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (%4 of 1%) per annum on the principal amount of the Loan not so withdrawn from time to time. Such commit- ment charge shall accrue from a date sixty days after the date of this Agreement to the respective dates on which amounts shall be withdrawn by the Borrower from the Loan Account as provided in Article IV of the Loan Regu- lations or shall be cancelled pursuant to Article V of the Loan Regulations. S 5 SECTION 2.04. The Borrower shall pay interest at the rate of five and three-quarter per cent (53/4%) per annum on the principal amount of the Loan so withdrawn and outstanding from time to time. SECTION 2.05. Except as the Bank and the Borrower shall otherwise agree, the charge payable for special com- mitments entered into by the Bank at the request of the Borrower pursuant to Section 4.02 of the Loan Regulations shall be at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of any such special commitments outstanding from time to time. SECTION 2.06. Interest and other charges shall be pay- able semi-annually on May 1 and November 1 in each year. SECTION 2.07. The Borrower shall repay the principal of the Loan in accordance with the amortization schedule set forth in Schedule 1 to this Agreement. ARTICLE III Use of Proceeds of the Loan SECTION 3.01. The Borrower shall apply the proceeds of the Loan exclusively to financing the cost of goods re- quired to carry out the Project described in Schedule 2 to this Agreement. The specific goods to be financed out of the proceeds of the Loan and the methods and procedures for procurement of such goods shall be determined by agree- ment between the Bank and the Borrower, subject to modi- fication by further agreement between them. SECTION 3.02. The Borrower shall cause all goods financed out of the proceeds of the Loan to be imported into the territories of the Guarantor and there to be used exclusively in the carrying out of the Project. S 6 ARTICLE IV Bonds SECTION 4.01. The Borrower shall execute and deliver Bonds representing the principal amount of the Loan as provided in the Loan Regulations. SECTION 4.02. The Administrador General of the Bor- rower and such person or persons as he shall appoint in writing are designated as authorized representatives of the Borrower for the purposes of Section 6.12 (a) of the Loan Regulations. ARTICLE V Particular Covenants SECTiON 5.01. (a) The Borrower shall carry out the Project with due diligence and efficiency and in conformity with sound engineering and financial practices. (b) The Borrower shall retain consultants satisfactory to the Bank, upon terms and conditions satisfactory to the Bank, to plan and supervise the execution of the Project. (c) Contracts entered into for carrying out of the Project shall be satisfactory to the Bank. (d) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans and specifications for the Project and any material modifications subsequently made therein, in such detail as the Bank shall from time to time request. (e) The Borrower shall maintain records adequate to identify the goods financed out of the proceeds of the Loan, to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof) and to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition 7 of the Borrower; shall enable the Bank's representatives to inspect the Project, the goods and any relevant records and documents; and shall furnish to the Bank all such informa- tion as the Bank shall reasonably request concerning the expenditure of the proceeds of the Loan, the Project, the goods, and the operations and financial condition of the Borrower. SECTION 5.02. (a) The Bank and the Borrower shall cooperate fully to assure that the purposes of the Loan will be accomplished. To that end, each of them shall furnish to the other all such information as it shall reasonably re- quest with regard to the general status of the Loan. (b) The Bank and the Borrower shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Loan and the maintenance of the service thereof. The Borrower shall promptly inform the Bank of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Loan or the maintenance of the service thereof. SECTION 5.03. The Borrower undertakes that, except as the Bank shall otherwise agree, if any lien shall be created on any assets of the Borrower as security for any debt, such lien will ipso facto equally and ratably secure the pay- ment of the principal of, and interest and other charges on, the Loan and the Bonds, and that in the creation of any such lien express provision will be made to that effect; provided, however, that the foregoing provisions of this Section shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such property; or (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. 8 SECTION 5.04. The Borrower shall pay or cause to be paid all taxes or fees, if any, imposed under the laws of the Guarantor or laws in effect in the territories of the Guaran- tor on or in connection with the execution, issue, delivery or registration of this Agreement, the Guarantee Agree- ment or the Bonds, or the payment of principal, interest or other charges thereunder; provided, however, that the provisions of this Section shall not apply to taxation of, or fee upon, payments under any Bond to a holder thereof other than the Bank when such Bond is beneficially owned by an individual or corporate resident of the Guarantor. SECTION 5.05. The Borrower shall pay or cause to be paid all taxes and fees, if any, imposed under the laws of the country or countries in whose currency the Loan and the Bonds are payable or laws in effect in the territories of such country or countries on or in connection with the execution, issue, delivery or registration of this Agreement, the Guarantee Agreement or the Bonds. SECTION 5.06. Except as shall be otherwise agreed be- tween the Bank and the Borrower, the Borrower shall in- sure or cause to be insured the goods financed out of the proceeds of the Loan against risks incident to their pur- chase and importation into the territories of the Guarantor. Such insurance shall be consistent with sound commercial practice and shall be payable in dollars or in the currency in which the cost of the goods insured thereunder shall be payable. SECTION 5.07. (a) The Borrower shall at all times main- tain its existence and right to carry on operations and shall, except as the Bank shall otherwise agree, take all steps necessary to maintain and renew all rights, powers, privileges and franchises which are necessary or useful in the conduct of its business. S 9 (b) The Borrower shall operate and maintain its plants, equipment and property, and from time to time make all necessary renewals and repairs thereof, all in accordance with sound engineering standards; and shall at all times operate its equipment and maintain its financial position in accordance with sound business and railway practices. SECTION 5.08. The Borrower shall not without the con- sent of the Bank sell or otherwise dispose of all or any substantial part of its property an(d assets unless the Borrower shall first redeem and pay or make adequate provision satisfactory to the Bank for redemption or pay- ment of all of the Loan which shall then be outstanding and unpaid. ARTICLE VI Remedies of the Bank SECTION 6.01. (i) If any event specified in paragraph (a), paragraph (b), paragraph (e) or paragraph (f) of Section 5.02 of the Loan Regulations shall occur and shall continue for a period of thirty days, or (ii) if any event specified in paragraph (c) of Section 5.02 of the Loan Regulations shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower, then at any subsequent time during the continuance thereof, the Bank, at its option, may de- clare the principal of the Loan and of all the Bonds then outstanding to be due and payable immediately, and upon any such declaration such principal shall become due and payable immediately, anything in this Agreement or in the Bonds to the contrary notwithstanding. S 10 ARTICLE VII Miscellaneous SECTION 7.01. The Closing Date shall be December 31, 1961. SECTION 7.02. A date 90 days after the date of this Agreement is hereby specified for the purposes of Section 9.04 of the Loan Regulations. SECTION 7.03. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Borrower: Ferrocarriles Nacionales de Colombia Calle 13 No. 18-24 Bogota, Colombia Alternative address for cablegrams and radiograms: Ferrocarriles Bogota Colombia For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington 25, D. C. United States of America Alternative address for cablegrams and radiograms: Intbafrad Washington, D. C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have 11 caused this Loan Agreement to be signed in their respective names and delivered in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ J. BURKE KNAPP Vice-President FERROCARRILES NACIONALES DE COLOMBIA By /s/ JORGE PENA POLO Authorized Representative By Authorized Representative 12 SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* May 1, 1962 $ 66,000 November 1, 1962 133,000 May 1, 1963 137,000 November 1, 1963 141,000 May 1, 1964 145,000 November 1, 1964 150,000 May 1, 1965 154,000 November 1, 1965 158,000 May 1, 1966 163,000 November 1, 1966 167,000 May 1, 1967 172,000 November 1, 1967 177,000 May 1, 1968 182,000 November 1, 1968 188,000 May 1, 1969 193,000 November 1, 1969 198,000 May 1, 1970 204,000 November 1, 1970 210,000 May 1, 1971 216,000 November 1, 1971 222,000 May 1, 1972 229,000 November 1, 1972 235,000 May 1, 1973 242,000 November 1, 1973 249,000 May 1, 1974 256,000 November 1, 1974 263,000 May 1, 1975 271,000 November 1, 1975 279,000 To the extent that any part of the Loan is repayable in a currency other than dollars (see Loan Regulations, Section 3.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. S 13 Premiums on Prepayment and Redemption The following percentages are specified as the premiums payable on repayment in advance of maturity of any part of the principal amount of the Loan pursuant to Section 2.05 (b) of the Loan Regulations or on the redemption of any Bond prior to its maturity pursuant to Section 6.16 of the Loan Regulations: Time of Prepayment or Redemption Premium Not more than three years before maturity. . 1/2% More than three years but not more than six years before maturity................. 2% More than six years but not more than eleven years before maturity.......... 3 % More than eleven years but not more than thirteen years before maturity.......... .4% More than thirteen years before maturity. . 534% * 14 SCHEDULE 2 Description of Project The Project consists of the acquisition of: (i) diesel loco- motives, (ii) parts to rehabilitate passenger coaches, (iii) freight-cars in "knocked-down" condition to be assembled in Colombia, and (iv) shop equipment, all of which for use primarily on the Atlantic Railroad with the object of in- creasing the Borrower 's freight and haulage capacity on such portion of its railway lines. 0 15 SCHEDULE 3 Modifications of Loan Regulations No. 4 For the purposes of this Agreement the provisions of Loan Regulations No. 4 of the Bank, dated June 15, 1956, shall be deemed to be modified as follows: (a) By the deletion of Section 2.02. (b) By the deletion of the first five lines of Section 5.02 and the substitution therefor of the following lines: "Section 5.02. Suspension by the Bank. If any of the following events shall have happened and be con- tinuing, the Bank may at any time or from time to time by notice to the Borrower suspend in whole or in part the right of the Borrower to make with- drawals from the Loan Account:" (c) By the deletion of Section 5.02 ",nd the substitution therefor of the following section: "After the date of the Loan Agreement and prior to the Effective Date any action shall have been taken which would have constituted a violation of any covenant contained in the Loan Agreement or Guarantee Agreement if the Loan Agreement and Guarantee Agreement had been effective on the date such action was taken." (d) By the deletion of Section 5.03 and the substitution therefor of the following section: "Section 5.03. Cancellation by the Bank. (a) If any of the events described or referred to in Section 5.02 shall have happened and be continuing, the Bank may by notice to the Borrower terminate in whole or in part the right of the Borrower to make with- drawals from the Loan Account and, upon the giving of such notice, the unwithdrawn amount of the Loan with respect to which such notice of termination shall have been given shall be cancelled. (b) If the Borrower shall not at the Closing Date have withdrawn from the Loan Account the full 16 amount of the Loan, the Bank may by notice to the Borrower terminate the right of the Borrower to make withdrawals from the Loan Account. Upon the giving of sucli notice the unwithdrawn amount of the Loan shall be cancelled." (e) By the deletion of the last paragraph of Section 5.02 and the substitution therefor of the following para- graph: "The right of the Borrower to make withdrawals from the Loan Account shall continue to be sus- pended in whole or in part, as the case may be, until the event or events which gave rise to such suspen- sion shall have ceased to exist or until the Bank shall have notified the Borrower that the right to make withdrawals has been restored, whichever is the earlier; provided, however, that in the case of any such notice of restoration, the right to make withdrawals shall be restored only to the extent and subject to the conditions specified in such notice, and no such notice shall affect or impair any right, power or remedy of the Bank in respect of any other or subsequent event described in this Section." (f) By the deletion of Section 9.03 and the substitution therefor of the following section: "Section 9.03. Effective Date. Notwithstanding the provisions of Section 8.01, except as shall be other- wise agreed by the Bank and the Borrower, the Loan Agreement and the Guarantee Agreement shall come into force and effect on that date upon which the Bank dispatches to the Borrower and to the Guarantor notice of its acceptance of the evidence required by Section 9.01." (g) By the deletion of paragraph 14 of Section 10.01 and the substitution therefor of the following paragraph: "14. The term 'external debt' means any debt pay- able in any medium other than currency of the Guarantor, whether such debt is or may beconme pay- able absolutely or at the option of the creditor in such other medium."