South Africa - Fifth Transport Project : Loan 0214 - Loan Agreement - Conformed

LOAN NUMBER 214 SA Loan Agreement (Fifth Transport Project) BETWEEN THE UNION OF SOUTH AFRICA AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED DECEMBER 2, 1958 LOAN NUMBER 214 SA Loan Agreement (Fifth Transport Project) BETWEEN THE UNION OF SOUTH AFRICA AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED DECEMBER 2, 1958 AGREEMENT, dated December 2, 1958, between THE UNION OF SOUTH AFRICA (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVEL- OPMENT (hereinafter called the Bank). WHEREAS the Borrower has been engaged for a number of years in carrying out a continuing program for the mod- ernization and expansion of its railway, harbor and road transport facilities; WHEREAS the Bank has from time to time granted loans to the Borrower for the purposes of such program, the last such loan having been made, upon the terms and conditions of a loan agreement between the Borrower and the Bank dated October 1, 1957, to assist the Borrower in financing such program for the three-year period ending March 31, 1960; WHEREAS the Borrower, having deemed it necessary to accelerate the carrying out of such program, now intends to incur additional expenditures thereon during the balance of such period and has requested a further loan from the Bank; WHEREAS concurrently with the raising of such loan the Borrower intends to raise additional funds for its general capital requirements by selling an issue of its bonds in the aggregate principal amount of $25,000,000 in the markets of the United States of America (hereinafter called the Public Bond Issue); and WHEREAS the Bank has agreed to grant a loan to the Bor- rower upon the terms and conditions hereinafter provided; Now THEREFORE it is hereby agreed as follows: 4 ARTICLE I Loan Regulations; Special Definition SECTION 1.01. The parties to this Loan Agreement accept all the provisions of Loan Regulations No. 3 of the Bank (ated June 15, 1956, subject, however, to the modifications thereof set forth in Schedule :3 to this Agreement (said Loan. Regulations No. 3 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. For the purposes of this Agreement, any reference in the Loan Agreement or in the Loan Regula- tions (including any Schedules thereto) to the "territories" of tle Borrower shall be construed to include a reference to any territory administered by the Borrower. 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 vurreicies equivalent to twenty-five million dollars ($25,000,000). SECTroN 2.02. The Bank shall open a Loa n Account on its books in the name of the Borrower and shall credit lo such Account the amount of tihe Loan. The amount of the Loan may be withdrawn from the Loan Account as provided in1, and subject to the rights of cancellation and suspelnsion set forth in, the Loan Regulations. SECTIo\ 2.03. The Borrower shall pay to the Bank a conmitmeint charge at the rate of three-fourths of onle per cent (% of 1%'o) peri annum ol tihe principal amount of the Loan1 not so withdrawn from tilme to time. Such commit- ment charge shall accrue from a (late sixty (lays after the date of this Agreement to the respective dates on which amounts shall be withdrawn by the Borrower from the Loan 늬 6 ARTICLE IV Bonds SSMON 4.01. The Borrower shall execute and deliver Bonds rel)rc ,enfing the principal amount of the 1-joan a,, provided in the 1joaii Regulations. SH, C T I Oi-,T 4.02. The Minister of Finance of the Borrower 1111d. such persoii or persons as he shall ap)')oi.nt in. wrifitig are desilgmtted as .1luthorized representatives of the Bor- rower for the purposes of Secti.oll. 6.12 of the Loan Regu- lations. ARTICLE V Particular Covenants SE,CTION ).01. (a) The Borrower shall ettuse thel'roject to be cm.ried out with due diligence -md efficiency mid ill (,onformity with. so-mid. e-lighweri'lig aml finatiei,-il practices. (1)) The shall maintain or cause to be illaill- t-mied records adequate to ideiifify the (,-oo('Is finaticed out of the proceeds of the Loaii, to disclose the use thereof in tho 'ProJect, to record the pl.ogrcss of the Project (illclud- iiig- the cost thereof), alid to reflect in -iccord-mce with ('01ISiStOlItIV IllAillt,"lilWd SOL111d. 'lCCOU1ltill() pl'-lCtiC(S tile oper,-itions (mid finaiwi,-il comlition of the South African 1 ,iilw,-iys mid Ifarbours Admiuistration; slmll enable t'he Mink's rew-eselltatives to inspect the Project, the goods and miy relev(int records and documents mid tile equil.nnent .111d prolm-fies ol)(,rMe(l by, and the operations of, the South Af rie(mi, Tiailwtiys mid llarbours Admiiii,Aration , and sh,-ill furnish, to the 'Bank fill. such infornitition as th.e Bank shall ]INISOM"Ibly request eoncerning the expenditure of the pro- ceeds of til(I Loan, the f1roject, the 2-oods, and the operations tt the, South. Africaii 1,171ailways and nd. fintIneial condition of Harbours Administration. (c) The Borrower shall maintain or cause to be main- tained. the plant, equipment and other property owned by it and operated by the South African Railways and Har- 7 hours Administration and shall make or cause to be made all necessary renewals and repairs thereof, all in accord- ance With sound engineering practices; and shall at all times operate or cause to be operated such plant, equipment and property in accordance with sound business practices. SECTION 5.02. (a) The Borrower and the Bank shall cooperate fully to assure that the purposes of the Loan will be accomplished. To that end, each of them shall fur- nish to the other all such information as it shall reasonably request with regard to the general status of the Loan. On the part of the Borrower, such information shall include information with respect to financial and economic condi- tiois in the territories of the Borrower and the international halance of payments position of the Borrower. (b) The Borrower and the Bank 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. (c) The Borrower shall afford all reasonable opportu- nity for accredited representatives of the Bank to visit any part of the territories of the Borrower for purposes related to the Loan. SECTION 5.03. It is the mutual intention of the Borrower and the Bank that no other external debt shall enjoy any priority over the Loan by way of a lien on public assets. To that end, 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 external debt, such lien will ipso facto equally and ratably secure the payment 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, 8 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; (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 procceds of sale of such commercial goods; or (iii) any lien created by the South African Reserve Bank on any of its assets in the ordinary course of its banking business to secure a debt maturing not more than one year after the date on which it is orig- iiially incurred. The term "assets of the Borrower " as used in this Section includes assets of the Borrower or of any of its Provinces or other political subdivisions or of any agency of the Borrower or of any such Provinces or other political sub- divisions, including assets of the South African Reserve Bank and of local goveriiin g authorities. SECTION 5.04. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid without deduction for, and free from, any taxes or fees imposed under the laws of the Borrower or laws in effect in its terri- tories; provided, however, that the pr-ovisiolls of this Sec- tion shall not apply to taxation of, or fees upon, payments under any Bond to a holder thereof other than the -Bank when such Bond is beneficially owned b an individual or corporate resident of the Borrower. SECTION 5.05. Tl1e Loan Agreement and the Bonds shall be free from any taxes or fees that shall be imposed under the laws of the Borrower or laws in effect in its territories on or in connection with the execution, issue, delivery or registration thereof and the Borrower shall pay all such 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. 9 SECTION 5.06. The principal of, and interest and other charges on, the Loan and the Bonds shall be paid free from all restrictions imposed under the laws of the Borrower or laws in effect in its territories. SECTION 5.07. The Borrower shall satisfy the Bank that adequate arrangements have been made to insure the goods financed out of the proceeds of the Loan against risks inci- dent to their purchase and importation into the territories of the Borrower. ARTICLE VI Remedies of the Bank SECTION 6.01. (i) If any event specifieu in paragraph (a) or paragraph (b) of Section 5.02 of the Loan Regula- tions 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 declare 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 notwith- standing. SECTION 6.02. The following are specified as additional events for the purposes of Section 5.02 (h) of the Loan Regulations: (i) Any event specified in paragraph (3) of Section 5.02 of Loan Regulations No. 3 of the Bank dated Au- gust 15, 1950, with reference to the Loan Agreement dated January 23, 1951, between the Borrower and the Bank shall have occurred; 10 (ii) Any event specified in paragraph (c) of Section 5.02 of Loan Regulations No. 3 of the Bank dated Octo- ber 15, 1952, with reference to the Loan Agreement dated August 28, 1953, between the Borrower and the Bank shall have occurred; (iii) Any event speciied in paragraph (c) of Section 5.02 of Loan Regulations No. 3 of the Bank dated Febru- ary 15, 1955, with reference to the Loan Agreement dnted November 28, 1955, between the Borrower and the Bank shall have occurred. ARTICLE VII Effective Date; Termination SECTTox 7.01. The following event is specified as an aditional condition to the effectiveness of this Agreement within the meaning of Section 9.01 (b) of the Loan Regu- lations, namely, that the Borrower shall have duly delivered ad received paymlent for the $25,000,000 aggregate prin- cipal amount of bonds of the Public Bond Issue. SECTIOx 7.02. A date 60 days after the date of this Agree- ment is hereby specified for the purposes of Section 9.04 of the Loan Regulations. ARTICLE VIII Miscellaneous SECTION 8.01. The Closing Date shall be September 30, 1960. SECTION 8.02. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Borrower: Secretary to the Treasury, Union Buildings Pretoria Union of South Africa 11 Al te rna tiv'e addre1ss for cablegral al radiograms: Finldep, Pretorin Soitli Africa For the Bank: Intenaitional innk for Reconstruction and Deelopment 1818 Hi Street, N.W. Washigton25, D. C United States of America Alternative address for cablegrams and radiograms: Intb,afrad Washington, D. C. SECTION 8.03. The Minister of Finance of the Borrower is designated for the purposes of Section 8.03 of the Loan Regulations. SECTION 8.04. In this Agreement any reference to the Minister of Finance of the Borrower shall include a refer- ence to any Minister of State of the Borrower for the time being acting for or on behalf of the Minister of Finance of the Borrower. IN WITNESS AXHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Loan Agreement to be signed in their respec- 12 tive names and delivered in the City of New York, State of New York, United States of America, as of the day and year first above written. THE UNION OF SOUTH AFRICA By W. C. DU PLESSIS Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By EUGENE R. BLACK President 13 SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* June 1, 1961 $1,253,000 December 1, 1961 1,289,000 June 1, 1962 1,326,000 December 1, 1962 1,364,000 June 1, 1963 1,403,000 December 1, 1963 1,443,000 June 1, 1964 1,485,000 December 1, 1964 1,527,000 June 1, 1965 1,571,000 December 1, 1965 1,616,000 Juie 1, 1966 1,663,000 December 1, 1966 1,711,000 June 1, 1967 1,760,000 December 1, 1967 1,811,000 June 1, 1968 1,862,000 December 1, 1968 1,916,000 * 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. 14 Premium 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 2 years before maturity ..... 1/2o More than 2 years but not more than 4 years before maturity............... 2%0 More than 4 years but not more than 6 years before maturity.............. 31/ More than 6 years but not more than 8 years before maturity. ............ 43/4%/o More than 8 years before maturity ........ 53/ %o 15 SCHEDULE 2 Description of the Project The Project is (a) the part of the development program of the South African Railways and Harbours Administra- tion relating to its railway, harbor and road transport facilities for the two-year period ending March 31, 1960; and (b) the completion to a state of practical usefulness within a reasonable time after March 31, 1960, of such components of the part of the program described in clause (a) as are scheduled to be still in progress at that date. The program is designed to increase the capacity of and modernize the transport facilities owned by the Borrower and operated by the South African Railways and Harbours Administration by modernizing, improving and adding to the existing facilities, with special emphasis on the increase of line and yard capacity, the expansion of motive power and rollino stock, the extension of modernized sionalling and traffic control facilities, and. the continued improvement and expansion of workshop facilities. The part of the program described in clause (a) above presently contemplates expenditure by the Borrower of the equivalent of approximately 1771 million South African pounds between April 1, 1958 and March 31, 1960. The main components of this part include: (i) the construction of new suburban, avoiding and branch lines; (ii) the strengthening and improvement of the existing peimanent way by the construction of deviations and by regrading; by the replacement and strengthening of bridges; and by relaying with heavier rails; (iii) the provision of additional tracks on various sections, and of new or enlarged marshalling yards and goods yards; (iv) the extension and improvement of electrified sections; 16 (v) the acquisition and construction of steam locomo- tives, electric lomomotive units, diesel locomotives, diesel rail-car sets, electric motor coaches, trailers, and goods wagons and other rolling stock, and spare parts for all of the foregoing; (vi) the modernization and expansion of manufacturing and repair facilities by the construction and enlarge- ment of mechanical workshops and running sheds and the acquisition and installation of machinery and equipment therefor; (vii) the improvement and installation of signalling and interlocking equipment, telegraph and telephone sys- tems, electric power distribution, water supplies and other railway facilities; (viii) the construction and remodelling of station buildinos ad layouts, goods sheds, staff quarters, office build- ings and other necessary buildings; (ix) the extension of harbor facilities and the acquisition and improvement of fixed and floating harbor equip- ment, pie-cooling plant and equipment required for construction work at the harbors. SCHEDULE 3 Modifications of Loan Regulations No. 3 For the purposes of this Agreement the provisions of Loan Regulations No. 3 of the Bank, dated June 15, 1956, shall be deemed to be modified as follows: (a) Section 2.02 is deleted. (b) Paragraph (c) of Section 5.02 is amended to read as follows: " (c) A default shall have occurred in the perform- ance of any other covenant or agreement on the part of the Borrower under the Loan Agreement or the 17 Bonds, or under the loan agreenent between the Borrower and the Bank dated October 1, 1957, or the bonds issuable thereunder." (c) The eighth paragraph of the Form of Bond set forth in Schedule 1 and the seventh paragraph of the Form of Bond set forth in Schedule 2 are amended by inserting, after the word "territories" in each such paragraph, the following: " (including terri- tories administered by it) ".