Colombia - Second Guadalupe Project : Loan 0282 - Loan Agreement - Conformed

LOAN NUMBER 282 CO Loan Agreement (Second Guacalupe Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND EMPRESAS PUBLICAS DE MEDELLIN DATED MAY 12, 1961 LOAN NUMBER 282 CO Loan Agreement (Second Guadalupe Project) BETWEEN is INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND EMPRESAS PUBLICAS DE MEDELLIN DATED MAY 12, 1961 Iinan Areemernt AGREEMENT, dated May 12, 1961 betv aen INTERNA- TIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (here- inafter called the Bank) and EMPRESAS PUBLICAS DE MEDEL- LIN (hereinafter called the Borrower). ARTICLE I Loan Regulations; Special Definitions SECTION 1.01. The parties to this Loan Agreement accept all the provisions of Loan Regulations No. 4 of the Bank dated February 15, 1961, with the same force and effect as if they were fully set forth herein. SECTION 1.02. Unless the context shall otherwise require, the following terms shall have the following meanings: (a) the term "Department" means one of the depart- ments (Empresas) of the Borrower; (b) the term "Power Department" means the electricity department (la Empresa de Energia Electrica) of 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 twenty-two million dollars ($22,000,000). 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 The amount of the Loan may be withdrawn from the Loan Account as pro- vided in this Agreement and in the Loan Regulations. 4 SECTION 2.03.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 unwithdrawn amount of the Loan. 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shall accrue from a date sixty days after the date of this Agreement to the respective dates on which amounts shall be withdrawn by the Bor- rower from the Loan Account as provided in Article IV of the Loan Regulations or shall be cancelled pursuant to Article V of the Loan Regulations.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shall pay interest at the rate of five and three-fourths per cent (5%%o) per annum on the principal amount of the Loan withdrawn from the Loan Account and outstanding from time to time.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%) 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 payable semi-annually on March 1 and September 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 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 5 procurement of such goods shall be determined by agree- ment between the Bank and the Borrower, subject to modifi- cation 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 into the terri- tories 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 General Manager (Gerente General) of the Borrower and such person or persons as he shall appoint in writing are designated as authorized representa- tives of the Borrower for the purposes of Section 6.12 (a) of the Loan Regulations. ARTICLE V Particular Covenants SECTION 5.01. (a) The Borrower shall carry out the Proj- ect with due diligence and efficiency and in conformity with sound engineering and financial practices. To assist it in carrying out the Project, the Borrower shall employ com- petent and experienced engineering consultants and con- tractors and the terms and conditions of their employment shall be mutually satisfactory to the Bank and the Bor- rower. (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. 6 (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 inspect the Project, the goods, the Borrower's properties and any relevant records and documents; and shall furnish to the Bank all such information as the Bank shall rea- sonably 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 co- operate 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 re- quest 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- feres 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; pro- vided, however, that the foregoing provisions of this Sec- tion shall not apply to: (i) any lien created on property, at 7 the 4ime of purchase thereof, solely as security for the payment of the purchase price of such property; (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date; or (iii) any lien created on revenues of any De- partment of the Borrower, other than the Power Depart- ment, to secure a debt of any such other Department. SECTION 5.04. The Borrower shall pay or cause to be paid all taxes or fees, if any, imposed under the laws of the 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 provisions 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 effect in the territories of such country or countries on or in connection with the execu- tion, issue, delivery or registration of this Agreement, the Guarantee Agreement or the Bonds. SECTION 5.06. (a) Except as shall be otherwise agreed between the Bank and the Borrower, the Borrower shall insure or cause to be insured with responsible insurers all goods financed with the proceeds of the Loan. Such in- surance shall cover such marine, transit and other hazards incident to purchase and importation of the goods into the territories of the Guarantor and to delivery thereof to the site of the Project, and shall be for such amounts as shall be consistent with sound commercial practice. Such 8 insurance shall be payable in dollars or in the currency in which the cost of the goods insured thereunder shall be payable. (b) In addition, the Borrower shall insure against such other risks and in such amounts as shall be consistent with sound public utility and business practices. 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 ma-itain its financial position in accordance with sound business and public utility practices. (c) The Borrower shall operate erch of its Departments separately and shall maintain separate records for the assets, revenues and expenditures of each of its Depart- ments. SECTION 5.08. The Borrower shall not, without the con- sent of the Bank, sell or otherwise dispose of all or sub- stantially all of its property and assets or all or substan- tially all the property included in the Project or any plant included therein, unless the Borrower shall first redeem and pay, or make adequate provision satisfactory to the Bank for redemption or paymen of, all of the Loan which shall then be outstanding and unpaid. SECTION 5.09. Except as the Bank shall otherwise agree: (a) the Power Department shall not incur any long- term indebetedness if thereby the proportion of its long- term indebtedness to equity would exceed a ratio of 60 to 9 40; and (b) no other Department shall incur long-term indebtedness unless its revenues will be sufficient to cover as they come due: (i) such other Department's operating expenses, including taxes, if any, and (ii) all debt service payments (interest, amortization, sinking fund and other charges on debt) on its existing debt and on the debt to be incurred by it. 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 purpose of this Section it shall be necessary to value in Colombian currency debt payable in another currency, such 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 obtainable for the purposes of servicing such debt, or if such other currency is not so obtainable, at the rate of exchange reasonably determined by the Bank. The term "equity" shall include capital and surplus determined in accordance with sound accounting practices. SECTION 5.10. The Departments of the Borrower, other than the Power Department, shall not incur debt maturing by its terms more than one year after the date on which it is incurred unless the holder of such debt explicitly agrees to forego any rights he may have to obtain satis- faction of his debt from the assets or revenues of the Power Department. SECTION 5.11. Whenever necessary and in any case not less frequently than every two years the Borrower shall take all steps necessary or desirable to obtain such adjust- ments in the rates for each operating Department as will provide revenues sufficient: (a) to cover operating expenses, including taxes, if any, and contributions to the Munici- pality of Medellin, adequate maintenance and depreciation, II 10 and interest; (b) to meet repayments on long-term indebt- edness but only to the extent that such repayments shall exceed provision for depreciation; and (c) to leave a reasonable surplus to finance new investment. ARTICLE VI Remedies of the Bank 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 the event specified in paragraph (a) of Section 6.02 of this Agree- ment for the purpose of Section 5.02 (j) of the Loan Regulations shall occur and shall continue for a period of thirty days, or (iii) if any event specified or referred to in Section 6.01 of the loan agreement between the Bank and the Borrower, dated May 20, 1959, shall have occurred and shall continue for the period therein specified, or (iv) 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 notico 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 notwithstanding. SEcTIox 6.02. For the purpose of Section 5.02 (j) of the Loan Regulations the following additional events are specified: (a) the Borrower shall have used the revenues or assets of the Power Department to meet an obligation of any other Department; (b) a default shall have occurred in the performance of any covenant or agreement on the part of the borrower or 11 the guarantor under the loan agreement between the Bank and the Borrower dated May 20, 1959 or the guarantee agreement between the Guarantor and the Bank of even date therewith or any bonds delivered pursuant to such loan agreement, other than a default in payment of prin- cipal or interest or any other payment required under such loan agreement, guarantee agreement and bonds. ARTICLE VII Termination; Miscellaneous SECTION 7.01. A date 90 days after the date of this Agreement is hereby specified for the purposes of Sec- tion 9.04 of the Loan Regulations. SECTION 7.02. The Closing Date shall be January 31, 1966. SECTION 7.03. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Borrower: Empresas Publicas de Medellin Medellin, Colombia Alternative address for cablegrams and radiograms: Empresas Medellin, Colombia 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. 12 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. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By W. A. B. ILIFF Vice President EMPRESAS PUBLICAS DE MEDELLIN By IGNACIO MESA Authorized Representative 13 SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* March 1, 1966 300,000 September 1, 1966 309,000 March 1, 1967 318,000 September 1, 1967 327,000 March 1, 1968 336,000 September 1, 1968 346,000 March 1, 1969 356,000 September 1, 1969 366,000 March 1, 1970 377,000 September 1, 1970 387,000 March 1, 1971 398,000 September 1, 1971 410,000 March 1, 1972 422,000 September 1, 1972 434,000 March 1, 1973 446,000 September 1, 1973 459,000 March 1, 1974 472,000 September 1, 1974 486,000 March 1, 1975 500,000 September 1, 1975 514,000 March 1, 1976 529,000 September 1, 1976 544,000 March 1, 1977 560,000 September 1, 1977 576,000 March 1, 1978 593,000 September 1, 1978 610,000 March 1, 1979 627,000 September 1, 1979 645,000 March 1, 1980 664,000 September 1, 1980 683,000 March 1, 1981 702,000 September 1, 1981 723,000 March 1, 1982 743,000 September 1, 1982 765,000 March 1, 1983 787,000 September 1, 1983 809,000 March 1, 1984 833,000 September 1, 1984 857,000 March 1, 1985 881,000 September 1, 1985 906,000 * To the extent that any part of the Loan is repayable in a currency other than dollars (see Loan Regulations, Section 3.03), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. 14 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 3 years before maturity....... .1/2 % More than 3 years but not more than 6 years before m aturity .......................... 1 More than 6 years but not more than 11 years before m aturity.......................... 134% More than 11 years but not more than 16 years before maturity........................ 2/. % More than 16 years but not more than 21 years before m aturity.......................... 3% % More than 21 years but not more than 23 years before m aturity.......................... 43/4 c More than 23 years before maturity.......... 53/4% 15 SCHEDULE 2 Description of the Project The Project consists of the following: 1. Expansion of the Troneras power plant by the instal- lation of a second 18,000 kw generating unit equipped with a Francis type turbine and auxiliary equipment. 2. Expansion of the Guadalupe III power plant by the installation of three additional 40,000 kw generating units equipped with vertical-shaft turbines of the Pelton type and of penstocks for four turbines, a transformer bank for each of the three units, and auxiliary and control equipment for the units. 3. Construction on the Tenche River at the Miraflores site of an earth-fill dam with a length of about 200 meters, and a maximum height of about 50 meters above the foundation, with a spillway and spillway tunnel and control works in the left abutment of the dam. 4. Expansion of the transmission facilities by either the construction of one additional double-circuit 120 kv t-eansmission line about 70 km long between the Guada- lupe switchyard and Medellin, or by providing the existing transmission facilities with capacitors or con- densers. 5. Expansion of the distribution system by the construc- tion of two new substations of 50,000 Kva each; by additions to existing substations in the Medellin area; by the construction of about 25 km of 120 kv lines to interconnect the substations; by the addition to the primary distribution system of about 250 lkn of three- phase and about 250 km of single-phase lines at 13.2 kv; by the addition of about 80,000 Kva of step- down transformers; and by the addition of about 600 km of secondary distribution system lines. 16 6. Completion of the project described in Schedule 2 to the loan agreement between the Bank and the Bor- rower dated May 20, 1959, as amended by further agreement between the parties. IF