Conformed Copy - L2858 - Fourth Small- and Medium-Scale Industry Project - Amendment 1

Page 1 September 26, 1989 Mr. Enrique Vilatela Director General de Captacion de Credito Externo Direccion General de Captacion de Credito Externo Subsecretaria de Hacienda y Credito Publico Palacio Nacional Primer Patio Mariano, 4o. piso - oficina 4037 06066 Mexico, D.F., Mexico Mr. Arturo Ortiz Hidalgo Director Internacional Direccion Internacional y de Tesoreria Nacional Financiera, S.N.C. Plaza NAFINSA Insurgentes Sur 1971 Torre Sur 9o. Piso 012020 Mexico, D.F., Mexico Re: Loan No. 2858-ME (Fourth Small-and Medium-Scale Industry Project) Dear Sir: Please refer to the Loan Agreement dated September 30, 1987 for the above-referenced Project (the Loan Agreement) between the International Bank for Reconstruction and Development (the Bank) and Nacional Financiera, S.N.C. (the Borrower), and to the Guarantee Agreement of even date-herewith between the United Mexican States (the Guarantor) and the Bank (the Guarantee Agreement). In response to your request and the discussions between our respective representatives, we are pleased to inform you that the Bank agrees to amend the Loan Agreement and the Guarantee Agreement for purposes of: 1) modifying the institutional arrangements for the Project to reflect that FIDEIN has been dissolved; and 2) allocating the Loan proceeds among participating institutions. Therefore, the following amendments to the Loan and Guarantee Agreements are proposed: I. Loan Agreement A. Section 1.02 1. Paragraph (b) is amended to read in its entirety as follows: "(b) "Fideicomisos" means collectively FOGAIN and FOMIN;" 2. Paragraphs (c) through (f) are deleted. 3. The following new paragraphs (c) and (d) are added: "(c) "PARK Project" means a specific development project to be carried out by an Investment Enterprise under Part B of the Project, utilizing the proceeds of the Loan;" "(d) "PARK Loan" means a loan made by the Borrower to an Investment Enterprise to assist in financing a PARK Project and to be partially financed out of the proceeds of the Loan, all in accordance with Page 2 the provisions of this Agreement;" 4. Paragraph (v) is amended by deleting the words "FIDEIN Loan" and substituting the words "PARK Loan" therefor. 5. Paragraph (z) is amended by deleting the words "FIDEIN Operating Regulations" therefrom. 6. Paragraphs (g) through (ii) are relettered (e) through (gg). 7. The "and" at the end of relettered paragraph. (ff) is deleted; the period at the end of relettered paragraph (gg) is deleted and "; and" substituted therefor. 8. The following new paragraphs are added after relettered paragraph (gg): "(hh)"CETES" means Certificados de la Tesoreria de la Federacion (Federal Treasury Certificates), as defined in the Diario Oficial de la Federacion, dated November 28, 1977, published by the Guarantor; (ii) "CETES Rate" means the average annual yield, calculated monthly, on CETES with maturities of up to one month, issued during the month in which a CETES Rate is calculated, or such other index reflecting the cost of funds to the Guarantor as shall be acceptable to the Guarantor and the Bank; and (jj) "LIBOR Rate" means the average rate per annum at which term deposits in dollars maturing in 3 months are offered in the London interbank market at 11:00 a.m. (London time) two business days before the date the rate of interest on the onlent funds denominated in dollars is calculated. For this purpose, "business day", means a day on which dealings in dollar deposits between banks may be carried on in London, England, and on which banks are open in Mexico City, Mexico. (kk) "Normatividad" means the Normatividad para el Ejercicio de Creditos Provenientes de Organismos Financieros Internacionales Destinados a la Banca de Desarrollo y Fondos de Fomento con Apoyos del Gobierno Federal por Diferenciales Negativos en Tasas de Interes, (Regulations Governing the Use of Loans from International Finance Institutions to Development Banks and Funds with Assistance from the Federal Government for Negative Differentials in Interest Rates), issued by the Secretaria de Hacienda y Credito Publico and the Secretaria de Programacion y Presupuesto, by means of Oficio No. 102-B-049, dated November 18, 1988." B. Article III of the Loan Agreement 1. Section 3.01 (b) is deleted and the following substituted therefor: "(b) The Borrower shall enter into contractual arrangements, satisfactory to the Bank, with the Guarantor and each Fideicomiso, providing, inter alia, for: (i) onlending the proceeds of the Loan to: (A) FOGAIN for purposes of carrying out Parts A and E of the Project; and (B) to FOMIN for purposes of carrying Page 3 out Parts C and E of the Project, under terms and conditions which shall include: (1) funds onlent shall be denominated and repayable either in pesos or dollars; (2) the interest rate charged on funds denominated in pesos shall be equal to the CETES Rate and shall be paid on amounts withdrawn and outstanding on a monthly basis; (3) the interest rate charged on funds denominated in dollars shall be equal to the LIBOR Rate plus one-half (0.5) percentage point and shall be paid on amounts withdrawn and outstanding on a quarterly basis; and (4) principal amounts withdrawn and outstanding shall be repaid semi-annually in accordance with the timetable set forth in the Amortization Schedule in Schedule 3 to this Agreement; and (ii) provision by the Guarantor to the Fideicomisos, in accordance with the Normatividad and by means of specific annual budgetary allocations, of all amounts required to cover: (A) the difference, if any, between the applicable CETES Rate or LIBOR Rate and the interest rate charged on the proceeds of the Loan onlent by the Fideicomisos; and (B) financial intermediation and operating costs of the Fideicomisos; and (iii) payment by the Guarantor to the Borrower of all amounts required by the Borrower to pay the Bank on account of principal, interest and other charges on the proceeds of the Loan. (c) Except as the Bank shall otherwise agree, the Borrower shall not change or fail to enforce the contractual arrangements referred to in paragraph (b) of this Section." 2. Section 3.02 is amended by: (1) deleting the words "FIDEIN Loans" from paragraph (a) thereof and substituting the words "PARK Loans" therefor; and (2) deleting the words "FIDEIN Loan" from paragraph (b) and substituting the words "PARK Loan" therefor. 3. Section 3.04 is amended to read in its entirety as follows: "Section 3.04. The Borrower, in its own capacity, in respect of Parts B and D of the Project, and as trustee of the Fideicomisos in respect of Parts A (1), A (2) and C (1) of the Project, shall use the amounts resulting from repayments of principal, and payment of interest or dividends, as the case may be, on FOGAIN Loans, PARK Loans, FOMIN Investments, FOMIN Restructuring Investments and Micro-Enterprise Loans for purposes consistent with the objectives of the Project as described in Schedule 2 to this Agreement." 4. Section 3.06 is deleted. C. Article IV of the Loan Agreement 1. Section 4.01 is amended: (1) by deleting ", B" from the second line thereof; and (2) by deleting the words "FIDEIN Project" and substituting the words "PARK Project" therefor. D. Article V of the Loan Agreement 1. Paragraphs (a) and (d) of Section 5.01 are amended respectively by deleting the words "FIDEIN" and "FIDEIN or" from said paragraphs. E. Schedule I to the Loan Agreement 1. The table set forth in paragraph (1) of Schedule 1 to the Loan Agreement is amended to read as per the attachment hereto. Page 4 2. Paragraph 2 (a) is amended by deleting the words "FIDEIN Loan" and substituting the words "PARK Loan" therefor. F. Schedule 2 to the Loan Agreement 1. Part B (1) to the Loan Agreement is amended by: (1) deleting "1." before the first paragraph; and (2) deleting the words "FIDEIN Operating Regulations" and substituting "the Diario Oficial of the Guarantor dated January 22 and November 25, 1986" therefor. 2. Parts B (2) and B (3) are deleted in their entirety. G. Schedule 5 to the Loan Agreement 1. The words "FIDEIN Project" and "FIDEIN Projects" are deleted whenever they appear in such schedule and the words "PARK Project" and "PARK Projects" are substituted respectively therefor; and (b) the words "FIDEIN Loan" and "FIDEIN Loans" are deleted whenever they appear in such schedule and the words "PARK Loan" and "PARK Loans" are substituted respectively therefor. H. Schedule 6 to the Loan Agreement 1. All references to Parts B (2) and B (3) of the Project are deleted. I. Schedule 7 to the Loan Agreement 1. Paragraph 2 is amended: (1) by deleting the words "FIDEIN Loans" from clause (i) thereof and substituting the words "PARK Loans" therefor; and (2) by deleting the words "FIDEIN Loan" from clause (i) (A) thereof and substituting the words "PARK Loan" therefor. II. Guarantee Agreement 1. "Section 2.02. The Guarantor shall enter into the contractual arrangements referred to in Section 3.01 (b) of the Loan Agreement, with the Borrower and each Fideicomiso. Except as the Bank shall otherwise agree, the Guarantor shall not change or fail to enforce any provision of the Normatividad or such contractual arrangements. Please indicate your agreement to the foregoing amendments by signing and dating the enclosed copy of this letter and returning the same to us. This amendment shall take effect on the date the Loan is declared effective, or on the last date a party confirms its agreement to this amendment, whichever is later. Because of their interest in the matter copies are being sent to Mssrs. Jose Angel Gurria Trevino and Antonio Cervera Sandoval at Secretaria de Hacienda y Credito Publico. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Rainer B. Steckhan Director Country Department II Latin America and the Caribbean Region Agreed: NACIONAL FINANCIERA S.N.C. By /s/ Arturo Ortiz Hidalgo Authorized Representative Date: September 27, 1989 UNITED MEXICAN STATES Page 5 By: /s/ Enrique Vilatela Authorized Representative Date: September 27, 1989 cc: Lic. Jose Angel Gurria Trevino Subsecretario de Asuntos Financieros Internacionales Secretaria de Hacienda y Credito Publico Palacio Nacional, Primer Patio Mariano piso 4 Oficina 427 Mexico, D.F. Mexico Lic. Antonio Cervera Sandoval Director de Organismos Financieros Internacionales Secretaria de Hacienda y Credito Publico Direccion General de Credito Publico Palacio Nacional - Edificio 4 Piso 4 06066 Mexico, D.F. Mexico Attachment 1 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures of items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent to be Financed (1) FOGAIN Loans for FOGAIN Subprojects under: (a) Part A (1) 1O,000,000 80% of the amounts of the disbursed by the Project Borrower under each FOGAIN Loan (b) Part A (2) 1O,000,000 of the Project (2) PARK Loans 20,000,000 80% of under Part B the amounts of the Project disbursed by the Borrower under each PARK Loan (3) FOMIN Invest- ments under: (a) Part C (1) 1O,000,000 80% of the amounts (i) of the disbursed by the Project Borrower under each FOMIN Investment (b) Part C (1) 10,000,000 (ii) of the Project (4) FOMIN Restruc- turing Invest- ment under: (a) Part C (1) 10,000,000 100% of the amounts (i) of the disbursed by the Page 6 Project Borrower under each FOMIN Restructuring Investment (b) Part C (1) 15,000,000 (ii) of the Project (5) Micro-Enter- 10,000,000 90% of the amounts prise Loans disbursed by the under Part D Borrower under each of the Micro-Enterprise Project Loan (6) Consultants' services, training activities and equipment under: (a) Parts A (3), 4,400,000 C (2), and E (1), (2) and (3) 100% of the Project (b) Part E (4) 600,000 of the Project (7) Amount cancelled 85,000,000 pursuant to Section 6.01 of the General Conditions TOTAL 185,000,000