Argentina - Fourth Buenos Aires Power Project : Loan 1330 - Guarantee Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1330 AR GUARANTEE AGREEMENT (Fourth Buenos Aires Power Project) between THE ARGENTINE REPUBLIC and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated November 1, 1976 GUARANTEE AGREEMENT AGREEMENT, dated November 1, 1976, between THE ARGENTINE REPUBLIC (hereinafter called the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS by the Loan Agreement of even date herewith between the Bank and Servicios El4ctricos del Gran Buenos Aires S.A. (hereinngfter called the Borrower), the Bank has agreed to make to the Borrower a loan in various currencies equivalent to one hun- dred and fifteen million dollars ($115,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Guarantor agree to guarantee the obligations of the Borrower in respect of such loan as hereinafter provided, and undertake the other obligations hereinafter set forth; and WHEREAS the Guarantor, in consideration of the Bank'n enter- ing into the Loan Agreement with the Borrower, has agreed so to guarantee such obligations of the Borrower, and undertake the other obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: -2- ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guar- antee Agreements of the Bank dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Loan and Guarantee Agreements being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the Gen- eral Conditions and in Section 1.02 of the Loan Agreement have the respective meanings therein set forth, and the term "Corpora- ci6n de Empresas Nacionales" means the agency of the Guarantor established by Law No. 20,558 of the Guarantor, and any successor thereto. -3- ARTICLE II Guarantee; Provision of Funds; Execution of Part B of the Project Section 2.01. Without limitation or restriction upon any of its other obligations under the Guarantee Agreement, the Guarantor hereby unconditionally guarantees, as primary obligor and not as surety merely, the due and punctual payment of the principal of, and interest and other charges on, the Loan, and the premium, if any, on the prepayment of the Loan, all as set forth in the Loan Agreement. Section 2.02. Without limitation or restriction upon the pro- visions of Section 2.01 of this Agreement, the Guarantor specifi- cally undertakes: (a) to take or cause to be taken all reasonable action, in- cluding action by Corporaci6n de Empresas Nacionales, as shall be necessary or appropriate to enable and to cause the Borrower to perform its obligations under the Loan Agreement; (b) whenever there is reasonable cause to believe that the funds available to the Borrower will be inadequate to meet the estimated expenditures required for the carrying out of Part A of the Project, to make arrangements, satisfactory to the Bank, promptly to provide the Borrower or cause the Borrower to be pro- vided with such funds as are needed to meet such expenditures, either by making additional equity investments in the Borrower or otherwise; and -4- (c) except as the Bank shall otherwise agree, to provide: (i) grants to the Borrower in amounts equivalent to not less than $50,300,000 during 1976 and $36,500,000 not later than June 30, 1977; and (ii) loans or cause to be provided loans to the Borrower in amounts equivalent to not less than $25,000,000, $42,000,000, $59,000,000 and $80,000,000, not later than June 30, 1977 and during each of the years 1978, 1979 and 1980, respectively, on terms and conditions satisfactory to the Bank. Section 2.03. (a) The Guarantor shall carry out Part B of the Project with due diligence and efficiency, with its own experi- enced and qualified staff, and, except as the Bank shall otherwise agree, shall complete said Part within 12 months after the date of this Agreement. (b) The Guarantor shall make contractual arrangements with the Borrower for the purposes set forth in Section 3.02 of the Loan Agreement. (c) In order to assist the Guarantor in certain matters re- garding the carrying out of the plan and the study included in Part.B of the Project, the Guarantor shall employ consulting firms or individual consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. (d) With respect to Part B of the Project, the Guarantor assumes towards the Bank, mutatis mutandis, the obligations set forth in Section 3.05 (b) (i) and (iii) of the Loan Agreement. -5 Section 2.04. The Guarantor shall exchange views with the Bank on the findings and recommendations of the plan and study in- cluded in Part B of the Project, and on the proposal for the carry- ing out of such recommendations. -6- ARTICLE III Other Covenants Section 3.01. It is the mutual intention of the Guarantor and the Bank that no other external debt shall enjoy any priority over the Loan by way of a lien on governmental assets. To that end, the Guarantor undertakes that, except as the Bank shall otherwise agree, if any lien shall be created on any assets of the Guarantor as security for any external debt, such lien will ipso facto equal- ly and ratably secure the payment of the principal of, and inter- est and other charges on, the Loan, and that in the creation of any such lien express provision will be made to that effect; pro- vided, 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; (ii) any lien on commercial goods to secure a debt maturing not more than one year after the date on which it is originally incurred and to be paid out of the pro- ceeds of sale of such commercial goods; or (iii) any lien arising in the ordinary course of banking transactions to secure a debt maturing not more than one year after the date on which it is ori- ginally incurred. The term "assets of the Guarantor" as used in this Section includes assets of the Guarantor or of any agency of the Guarantor, including assets of the Banco Central de la Repdblica Argentina or any institution performing the functions of a central bank for the Guarantor. -7- The Guarantor further undertakes that, within the limits of its constitutional powers, it will make the foregoing undertaking effective with respect to liens on the assets of any of its poli- tical subdivisions and their agencies, including local governing authorities. Section 3.02. The Guarantor covenants that it will cause its agencies to take all reasonable action in respect of the timely settlement of debt for electricity supplied to such agencies by the Borrower. The Guarantor undertakes that, within the limits of its con- stitutional powers, it will make the foregoing covenant effective with respect to its political subdivisions and their agencies, including local governing authorities. Section 3.03. The Guarantor shall take or cause to be taken from time to time all steps necessary to enable the Borrower to sell electricity at such rates as shall be required to obtain the revenues provided for in Section 5.05 of the Loan Agreement. Section 3.04. The Guarantor shall, from time to time, prompt- ly after each occurrence of the event specified in paragraph 2 of Article 15 of the Concession, cause the Borrower to take the ac- tion therein provided regarding the valuation of its assets. Section 3.05. The Guarantor shall take or cause its agencies to take all action necessary: (a) to coordinate the expansion of generating, transmission and distribution facilities of all elec- tric utility entities operating within the Greater Buenos Aires -8 0 area in order to prevent waste of energy, duplication of facili- ties and unnecessary investment; and (b) to continue to intercon- nect all such entities in such a manner as will permit the most economic and efficient operation thereof. Section 3.06. The Guarantor shall assist the Borrower in the carrying out of the study referred to in Section 4.02 of the Loan Agreement, and shall exchange views with the Bank on its conclu- sions and the Borrower's proposals to carry out its recommenda- tions. Section 3.07. Except as the Bank shall otherwise agree, the Guarantor shall not approve any new major investment in power generation or transmission until the plan included in Part B (a) of the Project shall be completed. Any subsequent major investment in power generation or transmission shall be in accordance with such plan, as amended from time to time. Ada -9- ARTICLE IV Representative of the Guarantor; Addresses Section 4.01. The Minister of Economics of the Guarantor is designated as representative of the Guarantor for the purposes of Section 11.03 of the General Conditions. Section 4.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Guarantor: Ministerio de Economfa Hipolito Yrigoyen 250 Buenos Aires Argentina Cable address: Telex: Ministerio Economa 121952 Buenos Aires For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (wUI) -10 0 IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. THE ARGENTINE REPUBLIC By /s! Adolfo Diz Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Adalbert Krieger Regional Vice President