Ethiopia - Second Telecommunications Project : Loan 0314 - Loan Agreement - Conformed

LOAN NUMBER 314 ET Loan Agreement (Second Telecomnunications Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND IMPERIAL BOARD OF TELECOMMUNICATIONS OF ETHIOPIA DATED MAY 31, 1962 0 LOAN NUMBER 314 ET Loan Agreement (Second Telecommunications Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION :AND DEVELOPMENT AND IMPERIAL BOARD OF TELECOMMUNICATIONS OF ETHIOPIA DATED MAY 31, 1962 Evai&n Agirerment AGREEMENT, dated May 31, 1962, between INTER- NATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and IMPERIAL BOARD OF TELE- COMMUNICATIONS OF ETHIOPIA (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 (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. SECTION 1.02. Wherever used in this Agreement or any schedule thereto the term "the Board" means the Imperial Board of Telecommunications of Ethiopia, a corporation created by a Proclamation for the Establishment of the Imperial Board of Telecommunications of Ethiopa (Procla- mation No. 131 of 1952 as amended) of the Guarantor, and shall include any successor to the Board. 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 two million nine hundred thousand United States of America dollars (US$2,900,000). 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 The amount of the Loan may be withdrawn from the Loan Account as provided 4 in, and subject to the rights of cancellation and suspension set forth in, the Loan Regulations.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charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not so withdrawn from time to time. Such com- mitment 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shall accrue from a date sixty days after the date of this Agreement to the respective dates on which amounts shall be withdrawn by the Borrower from the Loan Account as provided in Article IV of the Loan Regu- lations or shall be cancelled pursuant to Article V of the Loan Regulations.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 (53/4%) per annum on. the principal amount of the Loan so withdrawn and outotanding from time to time. SECTION 2.05. Except as the Bank and the Borrower 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 ( 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 May 1 and November 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 5 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- ment 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 into the territories of the Guiarantor 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 of the Borrower and such person or persons as he shall appoint in writing are designated as authorized representatives 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 and operate the Project with due diligence and efficiency and in conformity with sound engineering and financial practices. The Borrower shall have at all times an adequate and qualified management and staff. During the period of plan- ning and execution of the Project the Borrower shall employ engineering consultants and other experts acceptable to, and to an extent and upon terms and conditions satisfactory to, the Borrower and the Bank. (b) The Borrower shall furnish to the Bank, promptly upon their preparation, the plans and specifications for the 6 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 and shall enable the Bank's representatives to inspect the Project, the goods, the facilities operated by the Borrower, and any relevant records and documents. (d) The Borrower shall furnish to the Bank all such in- formation 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. Such information shall include audited financial statements of the Borrower to be furnished within a reason- able time after the close of the financial period involved. SECTION 5.02. Prior to the completion of the Project, the Borrower shall not undertake any major capital expenditure in addition to the Project unless the funds necessary there- for are reasonably assured. SECTION 5.03. (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 reason- ably request with regard to the general status of the Lean. (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 interferes with, or threatens to interfere with, the accomplishment of 7 the purposes of the Loan or the maintenance of the service thereof. SECTION 5.04. 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 debt, such lien will ipso facto equally and ratal)ly 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 iade 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 debt 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 arising in the ordinary course of banking transactions and securing a debt matur- ing not more than one year after its date. SECTION 5.05. The Borrower shall pay or cause to be paid all taxes and fees, if any, impospd under the laws of the Guarantor or laws in effect in the territories of the Guarantor on or in connection with the execution, issue, delivery or registration of this Agreement, the Guarantee Agreement 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 tax- ation 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 5.06. 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 8 the Bonds are payable or laws in effect in the territories of such country or countries on or in connection with the execution, issue, delivery or registration of this Agreement, the Guarantee Agreement or the Bonds. SECTION 5.07. (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 the goods financed out of the proceeds of the Loan against risks incident to their purchase and importation into the terri- tories of the Guarantor and to the delivery thereof to the site of the Project. Such insurance shall be consistent with sound commercial practice and 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 risks and in such amounts as shall be consistent with sound business and public utility practices. SECTION 5.08. (a) Except as the Bank and the Borrower shall otherwise agree, the Borrower sh,0l at all times main- tain its existence and right to carry on operations and shall take all steps necessary to maintain and renew all rights, powers, privileges 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 position in accordance with sound business and public utility practices. (c) The Borrower shall not, without the consent of the Bank, sell or otherwise dispose of any of its property or assets which shall be required for the efficient carrying on 0 9 of its business and undertaking, including the Project, unless the Borrower shall first pay or redeem, or make adequate provision satisfactory to the Bank for payment or redemption of, all of the Loan and the Bonds which shall then be outstanding and unpaid. SECTION 5.09. The Borrower shall adjust its rates from time to time as necessary to provide revenues sufficient: (a) to cover operating expenses, including taxes, if any, adequate maintenance and depreciation, and interest; (b) to meet repayments on any long-term indebtedness but only to the extent that such repayments shall exceed provision for depreciation; and (c) to produce a return on investment sufficient to finance a reasonable portion of the cost of expansion of telecommunication services consistent with the overall needs of the economy of the Guarantor. For the purposes of this Section the term "long-term indebtedness" shall mean debt maturing by its terms more than one year after the date on which it is originally incurred. 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 any event specified in paragraph (a) 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 notwithstanding. S 10 ARTICLE VII Miscellaneous SECTION 7.01. The Closing Date shall be December 31, 1965. 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. SECTION 7.03. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Borrower: Imperial Board of Telecommunications of Ethiopia Post Office Box 1047 Addis Ababa Alternative address for cablegrams and radiograms: Gentel Addis Ababa 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. 0 11 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 IMPERIAL BOARD OF TELECOMMUNICATIONS OF ETHIOPIA By BERHANU Authorized RepreSentative 12 SCHEDULE 1 Amortizqtion Schedule Payment of Principal Date Payment Due (expressed in dollars)* May 1, 1966 US$ 54,000 November 1, 1966 55,000 May 1, 1967 57,000 November 1, 1967 59,000 May 1, 1968 60,000 November 1, 1968 62,000 May 1, 1969 64,000 November 1, 1969 66,000 May 1, 1970 68,000 November 1, 1970 69,000 May 1, 1971 71,000 November 1, 1971 74,000 May 1, 1972 76,000 November 1, 1972 78,000 May 1, 1973 80,000 November 1, 1973 82,000 May 1, 1974 85,000 November 1, 1974 87,000 May 1, 1975 90,000 November 1, 1975 92,000 May 1, 1976 95,000 November 1, 1976 98,000 May 1, 1977 100,000 November 1, 1977 103,000 May 1, 1978 106,000 November 1, 1978 109,000 May 1, 1979 113,000 November 1, 1979 116,000 May 1, 1980 119,000 November 1, 1980 123,000 May 1, 1981 126,000 November 1, 1981 130,000 May 1, 1982 133,000 Total US$2,900,000 * 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. 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 three years before maturity ................../2 of 1% More than three years but not more than six years before maturity....... ..11/2 % More than six years but not more than eleven years before maturity.... 21/2% More than eleven years but not more than sixteen years before maturity... 3/2 % More than sixteen years but not more than eighteen years before maturity. . 43/4% More than eighteen years before maturity 53/4% 14 SCI[EDULE 2 Descriptioa of the Project The Project is the investment program of the Board for the calendar years 1962/6t/64. The program is for the rehabilitation and extension of the facilities owned and operated by the Board. The important components of the program are: 1. The extension of automatic telephone exchanges at Addis Ababa to a total of approximately 9,000 mem- bers. 2. The replacement of the existing automatic telephone exchange at Asmara by a new one of approximately 3,000 numbers. 3. Replacement of the existing manual switchboards at Dire Dawa and at Dessie with new automatic ex- changes each with approximately 500 numbers. 4. Extension of present manual switchboards at Harrar, Jijiga, Jimma, Ghion, Nazareth, Massawa and Assab and the addition of about 50 new manual switch- boards at other provincial towns, each with a capacity of between 5 and 100 numbers. 5. The extension of the urban networks and interurban exchanges at Addis Ababa, Asmara and at other provincial towns and some replacements and exten- sions of existing switchboards. 6. The construction of about 1,982 kilometers of new open wire long lines interconnecting various popu- lation centers. 7. Reconstruction of about 1,600 kilometers of existing pole lines. 8. Installation of an interurban cable of approximately 45 kilometers in length between Addis Ababa and 0s 15 Debre Zeit, together with additional entrance cables for interurban lines and installation of carrier equipment. 9. Installation of HF radio circuits and accessory equip- ment at Addis Ababa, Asmara, and at other provin- cial places. 10. Installation of additional equipment for radio- telegraph circuits. 11. Acquisition of land and construction of buildings for housing existing and new facilities.