South Africa - Sixth Transport Project : Loan 0228 - Loan Agreement - Conformed

LOAN NUMBER 228 SA Loan Agreement (Sixth Transport Project) BETWEEN * THE UNION OF SOUTH AFRICA AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED JUNE 10, 1959 LOAN NUMBER 228 SA Loan Agreement (Sixth Transport Project) BETWEEN THE UNION OF SOUTH AFRICA AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DATED JUNE 10, 1959 lCoatt Agmutrittt AGREEMENT, dated June 10, 1959, between THE UNION OF SOUTH AFRICA (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). 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 dated 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 Regulations (including any Schedules thereto) to the "territories" of the 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 currencies equivalent to eleven million six hundred thousand dollars ($11,600,000). 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 The amount of the Loan may be withdrawn from the Loan Account as provided in, and subject to the rights of cancellation and suspension set forth in, the Loan Regulations. 4 SECTION 2.03. The Borrower shall pay to the Bank a com- mitment charge at the rate of three-fourths of one per cent (% of 1%) per annum on the principal amount of the Loan not so withdrawn from time to time. Such commitment 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shall accrue from a date sixty days after the date of this Agreement to the respective dates on which amounts shall be withdrawn by the Borrower from the Loan Account as provided in Article IV of the Loan Regulations or shall be cancelled pursuant to Article V of the Loan Regulations. SECTION 2.04. The Borrower shall pay interest at the rate of six per cent (6%) per annum on the principal amount of the Loan so withdrawn and outstanding from time to time. SECTION 2.05. Except as the Borrower and the Bank 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/ 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 June 1 and December 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 SECT.JN 3.01. The Borrower shall cause the proceeds of the Loan to be applied exclusively to financing the cost of goods required to carry out the Project described in Sched- ule 2 to this Agreement. The specific goods to be financed out of the proceeds of the Loan shall be determined by agree- 5 ment between the Borrower and the Bank, 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 used in the territories of the Borrower exclusively in the carrying out of the Project. 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 Minister of Finance of the Borrower and such person or persons as he shall appoint in writing are designated as authorized representatives of the Bor- rower for the purposes of Section 6.12 of the Loan Regu- lati ons. ARTICLE V Particular Covenants SECTION 5.01. (a) The Borrower shall cause the Project to be carried out with due diligence and efficiency and in conformity with sound engineering and financial practices. (b) The Borrower shall maintain or cause to be main- tained 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 (includ- ing the cost thereof), and to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of the South African Railways and Harbours Administration; shall enable the Bank's representatives to inspect the Project, the goods and any relevant records and documents and the equipment and properties operated by, and the operations of, the South African Railways and Harbours Administration; and shall 6 furnish to the Bank all such information as the Bank shall reasonably request concerning the expenditure of the pro- ceeds of the Loan, the Project, the goods, and the operations and financial condition of the South African Railways and 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 Hlar- bours 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 furnish to the other all such information as it shall reasonably request with rega.rd 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- tions in the territories of the Borrower and the interna- tional balance of payments position of the Borrower. (b) The Borrower and the Bank shall from time to time exchange views through their represeintatives with regard to matters relating to the purposes of the Loan and the naintenamce of the service thereof. The Borrower shall promptly inform the Bank of any condition which inter- feres with, or threatens to interfere with, the accomplish- ment of the purposes of the Loan or the maintenance of the service thereof. (c) The Borrower shall afford all reasonable opportu- nity for aceredited representatives of the Bank to visit any part of lie territories of the Borrower for purposes related to the Loan. 7 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 eivgs 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; (ii) any lien on commercial goods to secure a deit maturing not more than one year after the date on which it is originally incurred and to be paid out of the proceeds 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- inally incurred. The term "assets of the Borrower" as used in this Section includes assets of the Borfower or of any of its Provinces or other political subdivisions or of any agency of the Bor- rower or of any such Provinces or other political subdivi- sions, including assets of the South African Reserve Bank and of local governing 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 territories; provided, however, that the provisions of this Section shall not apply to taxation of, or fees upon, pay- ments 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 Borrower. 8 SECTION 5.05. The 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 coun- try or countries in whose currency the Loan and the Bonds are payable or laws in effect in the territories of such country or countries. 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 incident to their purchase and importation into the terri- tories of the Borrower. ARTICLE VI Remedies of the Bank SECTION 6.01. (i) If any event specified 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 notwithstaiiding. 9 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 August 15, 1950, with reference to the Loan Agreement dated January 23, 1951, between the Borrower and the Bank shall have occurred; (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 specified 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 dated November 28, 1955, between the Borrower and the Bank shall have occurred. ARTICLE VII Modification of Loan Agreement Dated December 2, 1958 SECTION 7.01. For the purposes of the Loan Agreement dated December 2, 1958, between the Borrower and the Bank, paragraph (c) of Section 5.02 of Loan Regulations No. 3 of the Bank dated June 15, 1956, is hereby amended to read as follows: "(c) A default shall have occurred in the performance of any other covenant or agreement on the part of the Borrower under the Loan Agreement or the Bonds, or under either of the loan agreements between the Borrower and the Bank dated October 1, 1957, and June 10, 1959, or the bonds issuable thereunder." and the term "Loan Regulations" as used for the purposes of the said Loan Agreement shall mean Loan Regulations No. 3 of the Bank, dated June 15, 1956, as modified by Schedule 3 to said Loan Agreement and as further amended hereby. 10 ARTICLE VIII Miscellaneous SECTION 8.01. The Closing Date shall be September 30, 1960. SECTION 8.02. A date 60 days after the date of this Agreement is hereby specified for the purposes of Section 9.04 of the Loan Regulations. SECTION 8.03. 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 Alternative address for cablegrams and radiograms: Findep Pretoria South Africa 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. SECTION 8.04. The Minister of Finance of the Borrower is designated for the purposes of Section 8.03 of the Loan Regulations. 11 SECTION 8.03. In this Agreement any reference to the Minister of Finance of the Borrower shall include a refer- once 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 WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have 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. THE UNION OF SOUTH AFRICA By A. M. GROBLER Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By EUGENE R. BLACK President 12 SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars) * December 1, 1961 $575,000 June 1, 1962 593,000 December 1, 1962 611,000 June 1, 1963 629,000 December 1, 1963 648,000 June 1, 1964 667,000 December 1, 1964 687,000 June 1, 1965 708,000 December 1, 1965 729,000 June 1, 1966 751,000 December 1, 1966 773,000 June 1, 1967 797,000 December 1, 1967 821,000 June 1, 1968 845,000 December 1, 1968 870,000 June 1, 1969 896,000 * 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. 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 2 years before maturity .... /2% More than 2 years but not more than 4 years before maturity............... 2% More than 4 years but not more than 6 years before maturity............ 312 More than 6 years but not more than 8 years before maturity............... 5% More than 8 years before maturity....... .6% 14 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 Administi ation 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 rolling stock, the extension of modernized signalling 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 173 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 exist- ing permanent way by the construction of devia- tions and by regrading, by the replacement and strengthening of bridges; and by relaying with heavier rails; (iii) the provision of additional tracks on various sec- tions, and of new or enlarged marshalling yards and goods yards; 15 (iv) the extension and improvement of electrified sec- tions; (v) the acquisition and construction of steam locomo- tives, electric locomotive 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 manufactur- ing and repair facilities by the construction and enlargement of mechanical workshops and run- ning sheds and the acquisition and installation of machinery and equipment therefor; (vii) the improvement and installation of signalling and interlocking equipment, telegraph and telephone systems, electric power distribution, water sup- plies and other railway facilities; (viii) the construction and remodelling of station build- ings and layouts, goods sheds, staff quarters, office buildings and other necessary buildings; (ix) the extension of harbor facilities and the acquisi- tion and improvement of fixed and floating harbor equipment, precooling plant and equipment re- quired for construction work at the harbors. 16 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 f ollows: " (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 Bonds, or under the loan agreement between the Borrower and the Bank dated December 2, 1958, or the bonds issuable thereunder, or under the loan agreement between the Borrower and the Bank dated October 1, 1957, or the bonds issuable thereunder." (c) Section 9.03 is amended to read as follows: "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, Zhe Loan Agreement shall come into force and effect on the date upon -which the Bank dispatches to the Bor- rower notice of its acceptance of the evidence required by Section 9.01." (d) 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 territories administered by it) ".