Colombia - Guadalupe Project : Loan 0225 - Loan Agreement - Conformed

LOAN NUMBER 225 CO Loan Agreement (Guadalupe Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND EMPRESAS PUBLICAS DE MEDELLIN DATED MAY 20, 1959 LOAN NUMBER 225 CO Loan Agreement (Guadalupe Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND EMPRESAS PUBLICAS DE MEDELLIN DATED MAY 20, 1959 AGREEMENT, dated May 20, 1959, between 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 SECTION 1.01. The parties to this Loan Agreement accept all the provisions of Loan Regulations No. 4 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. 4 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. 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 twelve million dollars ($12,000,000). 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 The amount of the Loan may be withdrawn from the Loan Account as provided 4 in, and subject to the rights of cancellation and suspension set forth in, the Loan Regulations.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charge at the rate of three-fourths of one per cent (% of 1%) per- annum on the principal amount of the Loan not so withdrawn from time to time. Such commit- ment 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shall accrue from a date sixty days after the date of this Agreement to the respective dates on which amounts shall be withdrawn by the Borrower from the Loan Account as provided in Article IV of the Loan Regulations or shall be cancelled pursuant to Article V of the Loan Regulations.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 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 Secton 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 February 15 and August 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- 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 Guarantor and there to be used exclu- sively 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 Project 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 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. 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 reason- ably 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 Loau. (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 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 company 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 pay- ment 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 low 7 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 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 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 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. Except as shall be otherwise agreed between the Bank and the Borrower, the Borrower shall take out or cause to be taken out and maintain or cause to be maintained such insurance, against such risks and in such amounts, as shall be consistent with sound business practices. Insurance covering marine and transit hazards on the goods financed out of the proceeds of any part of the Loan 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, I 8 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 position in accordance with sound business and public utility practices. (c) The Borrower shall operate each 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 substan- tially all of its property and assets or all or substantially 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 payment 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 indebtedness if thereby the proportion of its long-term indebtedness to equity would exceed a ratio of 60 to 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. (a) The term "long-term indebtedness" shall mean debt maturing by its terms more than one year after the date 9 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 reasoiably determined by the Bank. (b) 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 satisfaction of his debt from the assets or revenues of the Power Depart- ment. 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- rnents in the rates for each operating Department as will provide revenues sufficient: (a) to cover operating expenses, including taxes, if any, adequate maintenance and deprecia- tion, and interest; (b) to meet repayments on long-term indebtedness 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 Section 6.02 of this Agreement for the purposes of Section 5.02 (j) of the Loan Regulations shall occur and 10 shall continue for a period of thirty days, or (iii) 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 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. SECTION 6.02. For the purposes of Section 5.02 (j) of the Loan Regulations the following additional event is speci- fied, namely, the Borrower shall have used the revenues or assets of the Power Department to meet an obligation of any other Department. ARTICLE VII Termination; Miscellaneous SECTION 7.01. The Closing Date shall be December 31, 1962. 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 Regilations: For the Borrower: Empresas Piblicas de Medellin Medellin, Colombia Alternative address for cablegrams and radiograms: Empresas Medellin, Colombia 11 For the Bank: International Bank for R econstruetion and Development 1818 H1 Street, NM. Washington 25, D. C. lnited States of America Alternative address for cablegrams a d P rniOgralms: Intbafrad Washington, D. C. IN WITNESS W1HEREOF, the parties hereto, acting through their representatives tihereunto duly authorized, havre caused this Loan Agreemeit to be signed in their respective names anid delivered in the District of Columbia, United States of! Ainerica, as of the dav and year first above written. INTERNATIONAL BANK FOR IRECoNRTRUCTION ANT' DEVELoPMENT By /s/ J. Bi,RiE KNAPP Vice-Preside nt EMPRESAS PTBLICAS DE MED-ELLIN By /s/ Oscanl. BAQUERO P. Authorized Representat.ire 12 SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* February 15, 1963 $135,000 August 15, 1963 139,000 February 15, 1964 143,000 August 15, 1964 147,000 February 15, 1965 152,000 August 15,1965 156,0VO February 15, 1966 161,000 August 15,1966 166,000 February 15, 1967 171,000 August 15, 1967 176,000 February 15, 1968 181,000 August 15, 1968 187,000 February 15, 1969 192,000 August 15, 1969 198,000 February 15, 1970 204,000 August 15,1970 210,000 February 15, 1971 216,000 August 15, 1971 223,000 February 15, 1972 229.000 August 15, 1972 236,000 February 15, 1973 243,000 August 15, 1973 251,000 February 15, 1974 258,000 August 15, 1974 266,000 February 15, 1975 274,000 August 15, 1975 282,000 February 15, 1976 291,000 August 15, 1976 299,000 February 15, 1977 308,000 August 15, 1977 318,000 February 15, 1978 327,000 August 15,1978 337,000 February 15, 1979 347,000 August 15, 1979 357,000 February 15, 1980 368,000 August 15, 1980 379,000 February 15, 1981 391,000 August 15,1981 402,000 February 15, 1982 414,000 August 15,1982 427,000 February 15, 1983 440,000 August 15, 1983 453,000 February 15, 1984 466,000 August 15, 1984 480,000 * 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. I 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 3 years before maturity. /% More than 3 years but not more than 6 years before maturity . .... ......... % More than 6 years but not more than 11 years before maturity . 2% More than 11 years but not more than 16 years before maturity . . 3% More than 16 years but not more than 21 years before maturity . 4% More than 21 years but not more than 23 years before maturity . . . 5% More than 23 years before maturity 6% 14 SCHEDULE 2 Description of the Project The Project consists of the following: 1. Construction of small diversion dams on the Tenche and Concepci6n rivers and of conduits totalling about 2,500 meters long to divert the flows of the Tenche and Con- cepci6n rivers into the Guadalupe river. 2. Construction across the Guadalupe river at the Troneras site of an earth-fill dam with a length of about 365 meters and a maximum height of about 37 meters above the streambed; a concrete spillway with a capacity of 690 cubic meters per second in the right bank about 200 meters above the dam; and an intake tower and an out- let tunnel, approximately 460 meters long, in the left bank. 3. Construction of a powerhouse located at the downstream end of the outlet tunnel of the dam adequate for the ultimate installation of two 16,000 kw turbo generators. One 16,000 kw generating unit equipped with a Francis type turbine with auxiliary equipment would be installed upon completion of the dam. 4. Construction below the Guadalupe Falls of a power- house, known as Guadalupe III, with appurtenant works including an intake arid a penstock and the installation of two 40,000 kw generating units equipped with tur- bines of the Pelton. type with vertical shaft and four water jets and the related auxiliary equipment. 5. Construction of a control building and a new switchyard, and installation of the related equipment and modern- ization of the control and switch-gear equipment in the existing Guadalupe I and II plants. 6. Construction of tie lines connecting the new switchyard to Guadalupe III and Troneras powerhouse and to the existing Guadalupe I and II plants. 15 7. Construction of a double circuit 120 kv transmission line about 70 km long between the new Guadalupe switch- yard and Medellin. 8. Construction of access roads to Guadalupe Falls and the Troneras site and purchase of construction equip- ment and shop equipment for maintenance. 9. Enlargement of the 120 kv substations in Medellin, addi- tion of transformer capacity and extension of primary and secondary distribution circuits in Medellin and its suburbs. 10. Additional studies of the Nare Scheme including hydro- logic and geologic surveys and the preparation of plans and specifications required for bidding. 16 SCHEDULE 3 Modifications of Loan Regulations No. 4 For the purposes of this Agreement the provisions of Loan Regulations No. 4 of the Bank, dated June 15, 1956, shall be deemed to be modified as follows: (a) By the deletion of Section 2.02. (b) By the deletion of Section 9.03 and the substitution therefor of the following Section: "Effective Date. Except as shall be otherwise agreed by the Bank and the Borrower, the Loan Agreement and Guarantee Agreement shall come into force and effect on the date upon which the Bank shall send to the Borrower and to the Guarantor notice of its acceptance of the evidence required by Section 9.01." (c) Paragraph 14 of Section 10.01 is changed to read as follows: "14. The term 'external debt' means any debt pay- able in any medium other than currency of the Guarantor, whether such debt is or may become payable absolutely or at the optio-0 of the creditor in such other medium." (d) Paragraph 18 of Section 10.01 is changed to read as follows: "18. The term 'assets' shall include property of any kind of any Department and revenues of the Power Department."