Colombia - La Esmeralda Project : Loan 0217 - Loan Agreement - Conformed

LOAN NUMBER 217 CO Loan Agreement (La Esmeralda Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND CENTRAL HIDROELECTRICA DE CALDAS LIMITADA DATED JANUARY 30, 1959 LOAN NUMBER 217 CO Loan Agreement (La Esmeralda Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND CENTRAL HIDROELECTRICA DE CALDAS LIMITADA DATED JANUARY 30, 1959 Ent Agrermut AGREEMENT, dated January 30, 1959, between INTER- NATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and CENTRAL HIDROELECTRICA DE CALDAs LimITADA (hereinafter called the Borrower). ARTICLE I Loan Regulations SECTION 1.01. The parties to this Loan Agreement accept all the provisions of Loan Regulations No. 4 of the Bank dated June 13, 1956 (said Loan Regulations No. 4 being hereinafter called the Loan Regulations), with the same force and effect as if they were fully set forth herein. 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 four million six hundred thousand dollars ($4,600,000). 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 The amount of the Loan may be withdrawn from the Loan Account as provided in, and subject to the rights of cancellation and suspension set forth in, the Loan Regulations. SECTION 2.03. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%/r ) per annum on the principal amount of the Loan not so withdrawn from time to time. Notwithstanding the provisions of Section 2.02 of the Loan Regulations, such commitment charge shall accrue from a date sixty days after the date of this Agreement to the respective dates on which 4 amounts shall be withdrawn by the Borrower from the Loan Account as provided in Article IV of the Loan -Regulations or shall be cancelled pursuant to Article V of the Loan Regulations.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pay interest at the rate of five and three-quarters per cent (53/417c) per annum on the principal amount of the Loan so withdrawn and outstanding from time to time.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 commit- ments entered into by the Bank at the request of the Bor- rower 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%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 15 and November 15 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 required 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- nient 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 5 into the territories of the Guarantor and there to be used 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 Manager (Gerente) of the Borrower and such person or persons as he shall appoint in writing are designated as authorized representatives of the Bor- iower for the purposes of Section 6.12 (1) 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 engineerig and financial practices. To assist it in carrying out the Project, the Borrower shall employ competent and experienced engineering consultants and contractors and the terms and conditions of their employ- ment shall be mutually satisfactory to the Bank and the Borrower. (b) 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. (c) 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 of the Borrower; shall enable the Bank's representatives to 6 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 request 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 inter- fores with, or threatens to interfere with, the accomplish- ment 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, or of any corporation or com- pany all or a majority of the capital stock of which shall be owned by the Borrower, as security for any 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; 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. SECTION 5.04. The Borrower shall pay or cause to be paid all taxes or fees, if any, imposed under the laws of the 7 Guarantor or laws in effect in the territories of the Guar- antor 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 pro- visions of this Section 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 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 offect in the territories of such country or countries on or in connection with the execution, issue, delivery or registration of this Agree- ment, the Guarantee Agreement or the Bonds. SECTION 5.06. Except as shall be otherwise agreed between the Bank and the Borrower, the Borrower shall insure or cause to be insured the goods financed out of the proceeds of the Loan against risks incident to their purchase and importation into the territories of the Guarantor. Such insurance shall be consistent with sound commercial prac- tice 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, privi- leges and franchises which are necessary or useful in the conduct of its business. (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 plants and equipment and maintain its financial I 8 position in accordance with sound business and public utility practices. SECTION 5.08. The Borrower shall not, without the con- sent of the Bank, sell or otherwise dispose of all or substan- tiAly all of its property aid assets or all or substantially all the property included in the Ptroject or any plant included therein, unless the Borrower shall first redeem and pay, or make adequate provision satisfactory to the Bank for redemption or payment of, all of the Loan which shall then be outstanding and unpaid. SECTION 5.09. Until such time as the Project shall have been completed, the Borrower shall not, without the consent of the Bank, undertake or execute any major projects or developments other than the Project or iake any major additions to its plant and other properties. SECTION 5.10. Unless the Bank shall otherwise agree, the Borrower shall not declare or pay any dividend, or make any distribution on any shares of its capital stock, other than a dividend payable solely in shares of its capital stock, nor shall the Borrower acquire any shares of its capital stock for a consideration, if, as a result of any such dividend or distribution (other than those payable solely in shares of its stock) or such acquisition of shares of capital stock, the accumulated earned surplus of the Borrower, determined after adequate provision for maintenance and depreciation and otherwise in accordance with sound accounting prac- tice, would be ieduced below an amount equivalent to the Borrower's aggregate requirements for the next twelve- month period for the payment of principal (including amor- tization and sinking fund paynents) of, and interest and other charges on, all outstanding debt other than debt incurred in the ordinary course of business and maturino bY its terms in not more than one Year after its date. SECTION 5.11. Except as the Bank shall otherwise agree, the Borrower shall not incur any long-term indebtedness if, after the incurring of any such long-term indebtedness, the 9 long-term indebtedness of the Borrower would exceed the total capital and surplus of the Borrower. As used in this Agreement .d in the Guarantee Agreement, the following terms shall have the meanings hereinafter set forth. (a) The term "long-term indebtedness" shall mean debt maturing by its terms more than one year after the date on which it is incurred. Whenever for the puroIose of this Section it shall be necessary to value in Colombian currency debt payable in another currency, m,th valuation shall be made on the basis of the rate of exchange at which such other currency, at the time such valuation is made, is obtain- able for the purposes of servicing such debt, or if such other currency is not so obtainable, at the rate of exchange reason- ably determined by the Bank. (b) The term "capital and surplus" shalt mean capital and surplus deterinied in accordance with sound account- ing practices. SECTION 5.12. The Borrower shall from time to time take all steps necessary or desirable to obtain such adjust- ments in its rates as will provide revenues sufficient: (a) to cover operating expenses, including taxes, if any, adequate maintenance and depreciation, and interest; (b) to meet repayments on long-term indebtedness but only to the extent that such repayments shall exceed provision for deprecia- tion; and (c) to leave a reasonable surplus to finance new investment. ARTICLE VI Remedies of the Bark 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 clays after notice thereof shall have been given by the Bank to the Borrower, then at any subsequent time during 10 the continuance thereof, the Bank, at its option, may declare the principal of the Loan and of all the Bonds then out- standing to be due and payable immediately, and upon any such declaration such principal shall become due and pay- able immediately, anything in this Agreement or in the Bonds to the contrary notwithstanding. ARTICLE VII Effective Date; Termination SECTION 7.01. The following event is specified as an addi- tional condition to the effectiveness of this Agreement within the meaning of Section 9.01 (a) (ii) of the Loan Regulations, namely: that the Borrower shall have sub- mitted evidence to the Bank that, since December 31, 1957, the Borrower's shareholders have undertaken in a form satisfactory to the Bank to subscribe for additional shares with a paid-in value of not less than 12.5 million Colombian pesos. 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. ARTICLE VIII Miscellaneous SECTION 8.01. The Closing Date shall be June 30, 1962. SECTION 8.02. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Borrower: Central Hidroelectrica de Caldas Limitada Manizales, Colombia Alternative address for cablegrams and radiograms: Hidroelectrica lanizales, Colombia 11 For the Bank: International Bank for Rieconstruction and Development 1818 H Street, N.W. Washington 25, D. C. United States of America Alternative address for cablegrams andi radiograms: Intbafrad Washington, D. C. IN WITNESS WHEREoF, the parties hereto, acting through their representatives thereun to 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 (lay and year first above written. INTERNATIONAL BANi FoR RECONSTRUCTION AND DEVELOPMENT By /s/ W. A. B. ILIFF Vice-President CENTRAL IIIDROELECTRICA DE CALDAS LIMITADA By /s/ SANTIAGO SALAZAR Au thorized Representative 12 SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* November 15, 1962 $ 82,000 May 15, 1963 84,000 November 15, 1963 86,000 May 15, 1964 89,000 November 13, 1964 91,000 May 15, 1965 94,000 November 13, 1963 97,000 May 13 1966 100,000 November 13, 1966 102,000 May 13, 1967 105,000 November 13, 1967 108,000 May 15, 1968 111,000 November 13, 1 968 115,000 May 13, 1.969 118,000 November 13, 1969 121,000 May 13, 1970 123,000 November 13, 1970 128,000 May 13, 1971 132,000 November 13, 1971 136,000 Ma y 13, 1972 140,000 November 13, 1972 144,000 May 15, 1973 148,000 November 13, 1973 152,000 May 13, 1974 157,000 November 13, 1974 161,000 May 15, 1973 166,000 November 13, 1973 170,000 May 13, 1976 175,000 November 13, 1976 180,000 May 15, 1977 186,000 November 13, 1977 191,000 May 13, 1978 196,000 November 13, 1978 202,000 May 13, 1979 208,000 * 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 auy 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 3 years before maturity Y More than 3 years but not more than 6 years before maturity . 1% More than 6 years but not more tban 11 years before maturity 21/2% More than 11 years but not more than 16 years before maturity. 3% More than 16 years but not more than 18 years before maturity 447 More than 18 years before maturity 53/4. 14 SCHEDULE 2 Description of the Project The Project consists of the following: 1. Construction of a barrage and intake works across the Campoalegre River immediately below the discharge of the La Insula plant; 2. Construction of a series of canals and siphons with a capacity of 22 cubic meters per second with a total length of about 14 kilometers, and a regulating tank with a capacity of 30,000 cubic meters; 3. Installation of two penstocks from the regulating tank to the powerhouse, with a head of about 174 meters; 4. Construction of a powerhouse with appurtenant works at La Esmeralda, and installation of two turbo-gener- ators of the Francis type with a capacity of 13,300 kw each and the related auxiliary equipment and controls; 5. Construction of a substation at the Esmeralda power- house stepping up the voltage from 13.8 to 110 kv; 6. Construction of a 110 kv transmission line. from the Esmeralda substation to La Insula and from La Insula to La Rosa with a total length of about 35 kilometers; 7. Construction and/or enlargement of 110 kv substations at La Insula, La Rosa, Armenia and Cartago; 8. Construction of 33 and 13.2 kv lines with a total length of about 112 kilometers, and related substations, between the following points: Armenia-Montenegro, Montenegro- Quimbaya, Marsella-Belalcazar, Belalczar-El Aguila, El Aguila-Viterbo, El Aguila-Calamar-La Virginia, Cala- mar-Balboa, Viterho-Apia, Apia-Santuario, Anserma- GuAtica, Anserma-Puente Umbria Mistrat6, Gua'tica- Quinchi. and Puente Umbria-Bel6n de Umbria; and 9. Reconstruction and enlargement of the distribution sys- tems in the following towns: Aguadas, Pacora, La Mer- ced, Apia, Balboa, Belalcizar, La Virginia, Santuario, Viterbo, Beln de Umbria, Mistrat6, Gua'tica and Quin- chia.