Barbados - Industrial Development And Export Promotion Project : Loan 1813 - Loan Agreement - Conformed

ED OCThFTS LOAN NUMBER 1813 BAR Loan Agreement (Industrial Development and Export Promotion Project) between BARBADOS and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated , 1980 LOAN NUMBER 1813 BAR LOAN AGREEMENT AGREEMENT, dated ; 2 , 1980, between BARBADOS (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS (A) the Borrower has requested the Bank to assist in the financing of the Project described in Schedule 2 to this Agreement by making the Loan as hereinafter provided; (B) Part A of the Project will be carried out by the Bar- bados Industrial Development Corporation (hereinafter called BIDC) and Part B of the Project by the Barbados Development Bank (here- inafter called BDB) with the Borrower'3 assistance and, as part of such assistance, the Borrower will make available to BIDC six million dollars ($6,000,000) equivalent and to BDB three million two hundred thousand dollars ($3,200,000) equivalent out of the proceeds of the Loan as hereinafter provided; (C) the Borrower intends to obtain from the Caribbean Development Bank a loan (hereinafter called the CDB Loan) in an amount equivalent to two million three hundred fifty thousand dollars ($2,350,000) to assist in financing Part A of the Project; and WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to make the Loan available to the Borrower upon the terms and conditions set forth hereinafter and in two separate project agreements of even date herewith the first between the Bank and BIDC and the second between the Bank and BDB; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated march 15, 1974, with the same force and *effect as if they were fully set forth herein (said General Conditions Applicable to Loan,and Guarantee Agree- ments of the Bank being hereinafter called the General Condi- tieas). -2- Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the! General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "BIDC Project Agreement" means the agreement between the Bank and BIDC of even date herewith, as the same may be amended from time to -ime, and such term includes all schedules, and all agreements supplemental, to the BIDC Project Agreement; (b) "BDB Project Agreement" means the agreement between the Bank and BDB of even date herewith, as the same may be amended from time to time, and such term includes all schedules, and all agreements supplemental, to the BDB Project Agreement; (c) "Project Agreements" means the BIDC Project Agreement and the BDB Project Agreement; (d) "BIDC" means the Barbados Industrial Development Cor- poration, a statutory corporation established by the Barbados Industrial Development Corporation Act (Cap: 341); (e) "BDB" means the Barbados Development Bank, a statutory corporation established by the Barbados Development Bank Act (Cap. 323); (f) "BIDC Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and BIDC pursuant to Section 3.01 (d) of this Agreement, as the same may be amended from time to time; (g) "BDB Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and BDB pursuant to Section 3.01 (d) of this Agreement, as the same may be amended from time to time; (h) "Subsidiary Loan Agreements" means the BIDC Subsidiary Loan Agreement and the BDB Subsidiary Loan Agreement; (i) "EPC" means the Export Promotion Corporation, a statu- tory corporation established by the Export Promotion Corporation Act (Act 1979-22); -3- (j) "NTB" means the National Training Board, a statutory corporation established by the Occup,ational Training Act (Act 1979-28); (k) "BIMAP" means the Barbados Institute for Management and Productivity, a company established and operating under the Companies Act (Cap. 308); (1) "sub-loan" means a loan made or proposed to be made by BDB out of the proceeds of the Loan to an industrial enterprise for an industrial project and "free limit sub-loan" has the meaning assigned to it by paragraph 4 of Schedule 1 to this Agreement; (m) "industrial enterprise" means an industrial enterprise to which BDB proposes to make or has made a sub-loan; (n) "industrial project" means a specific development project to be carried out by an industrial enterprise utilizing the proceeds of a sub-loan; (o) "Barbados Dollars" or the sign "BD$" means currency of the Borrower; (p) "Foreign currency" means any currency other than the currency of the Borrower; (q) "Statutes" means with respect: (i) to BIDC, the Bor- rower's Industrial Development Corporation Act (Cap. 341), and (ii) BDB, the Barbados Development Bank Act (Cap. 323), as amended; (r) "Statement of Policies and Procedures" means the state- ment of BDB's policies and procedures approved by BDB's Board of Directors, as amendee to the date of this Agreement; (s) "Pricing Policy Statement" means the statement of BIDC's rental, leasing and sales policy approved by BIDC's Board of Directors, as amended to the date of this Agreement; and (t) "Subsidiary" means any company of which a majority of the outstanding voting stock or other proprietary interest Is owned or effectively controlled by BIDC or BDB (as the case may be) or by any one or more subsidiaries of BIDC or BDB or by BIDC or BDB and one or more of its subsidiaries. -4- ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to ten million dollars ($10,000,000). Section 2.02. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank, for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Loan. Section 2.03. Except as the Bank shall otherwise agree, procurement of the goods required for Part D of the Project and to be financed out of the proceeds of the Loan, shall be governed by the provisions of Schedule 1 to the BIDC Project Agreement. Section 2.04. The Closing Date shall be March 31, 1984 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.05. The Borrower shall pay to the Bank a commit- ment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the prinicipal mount of the Loan not withdrawn from time to time. Section 2.06. The Borrower shall pay interest at the rate of eight and twenty-five hundredths per cent (8.25%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semiannually on June 1 and December 1 in each year. Section 2.08. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. Section 2.09. BIDC with respect to withdrawals under Category (1) in Schedule 1 hereto and BDB with respect to withdrawals under -5- Category (2) in said Schedule are designated as representatives of the Borrower for the purposes of taking any action required or permitted to be taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out or cause to be carried out by EPC, NTB and BIMAP (as the case may require) Parts C and D of the Project with. dpe diligence and efficiency and in conformity with appropriate administrative, finaial and business practices. (b) Without any limitation or restriction upon any of its other obligations under the Loan Agreement, the Borrower shall cause BIDC and BDB to perform in accordance with the provisions of the BIDC Project Agreement and the BDB Project Agreement all the obligations therein set forth, shall take or cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable BIDC and BDB to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (c) The Borrower shall provide in its budgets, and make available as and when required, sums sufficient to cover costs of the Project not financed by the Bank and the Caribbean Devel- opment Bank. These shall be in the form of capital contributions to BIDC, equity contributions to BDB and grants to EPC, BIMAP and NTB. It is presently estimated by the Bank and the Borrower that the sums to be so provided will amount to not less than nineteen million one hundred thousand Barbados Dollars (BD$19,100,000) over the Project period. (d) The Borrower shall relend part of the proceeds of the Loan under subsidiary loan agreements to be entered into between the Borrower and BIDC and between the Borrower and BDB, under terms and conditions which shall have been approved by the Bank. The Subsidiary Loan Agreements shall provide for not less than the equivalent of six million dollars ($6,000,000) or such amounts as shall be allocated to Category (1) in Schedule 1 hereto to be relent to BIDC and not less than the equivalent of three million two hundred thousand dollars ($3,200,000) or such amounts as shall -6- be allocated to Category (2) in Schedule 1 hereto to be relent to BDB. The terms and conditions of the BIDC Subsidiary Loan Agree- ment shall include interest at 10% per annum, and repayment of principal in 15 years including 3 years of grace. Those of the BDB Subsidiary Loan Agreement shall include interest and repayment of principal on the same terms and conditions as apply to the Borrower under the Loan. The Subsidiary Loan Agreements shall require the Borrower to bear any foreign exchange risks. (e) The Borrower shall exercise its rights under the Subsi- diary Loan Agreements in such manner as to protect the interests of the Borrower and the Bank and to accomplish the purposes of the Loan, and except as the Bank shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreements or any provision thereof. Section 3.02. The Borrower shall establish and thereafter maintain in its Ministry of Finance and Planning a special project account to be used exclusively to record payments for goods and services required for the Project and repayments received under the Subsidiary Loan Agreements. ARTICLE IV Other Covenants Section 4.01. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, special security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of foreign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any external debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, ipso facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Borrower, in creating or permitting the creation of such lien, shall make express provision to that effect; provided, however, that, if for any constitutional or other .legal reason such provision cannot be made with respect to any lien created on assets of any of its political or administrative subdivisions, the -7- Borrower shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other public assets satisfactory to the Bank. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; and (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. (c) As used in this Section, the term "public assets" means assets of the Borrower, of any political or administrative subdivision thereof and of any entity owned or controlled by, or operating for the account or benefit of, the Borrower or any such subdivision, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Borrower. Section 4.02. The Borrower shall carry out not later than December 31, 1980 its plan for (i) reorganizing and expanding BDB's Board of Directors so as to give local manufacturers ade- quate representation on the Board and (ii) increasing BDB's authorized capital to twenty five million Barbados Dollars (BD$25,000,000). Section 4.03. The Borrower shall cause BDB to prepare and send to the Bank not later than June 30, 1980 a plan satis- factory to the Bank for increasing BDB's staff and for restruc- turing the salary scale of such staff and shall approve such plan not later than December 31, 1980. Section 4.04. The Borrower shall assume any foreign exchange risk or risk of default relating to funds channelled at the Borrower's request to BDB to lend for housing or other purposes undertaken on behalf of the Borrower. Section 4.05. (a) The Borrower shall cause to be employed not later than September 30, 1980 a chief executive officer for the Export Fromotion Corporation whose qualifications and experience and terms and conditions of employment shall be satisfactory to the Bank. -8- (b) The Borrower shall cause the Export Promotion Corpora- tion to organize and adequately staff the Corporation in a manner satisfactory to the Bank not later than December 31, 1980. ARTICLE V Remedies of the Bank Section 5.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified pursuant to paragraph (k) thereof: (a) BIDC or BDB shall have failed to perform any covenant, agreement or obligation of BIDC or BDB respectively under the Project Agreements; (b) The Borrower, BIDC or BDB shall have failed to perform any covenant, agreement or obligation of the Borrower, BIDC or BDB respectively under the Subsidiary Loan Agreements; (c) An extraordinary situation shall have arisen which shall make it improbable that BIDC or BDB will be able to perform their obligations under the Project Agreements; (d) Any of the Statutes shall have been amended, suspended, abrogated, repealed or waived in such a way as to materially and adversely affect the ability of BIDC or BDB to carry out the covenants, agreements and obligations set forth in the Project Agreements; (e) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of BIDC or BDB or for the suspension of the operations of BIDC or BDB; (f) Any part of the principal amount of any loan to BDB having an original maturity of one year or more shall, in accor- dance with its terms, have become due and payable in advance of maturity as provided in the relative contractual instruments, or any security for any such loan shall have become enforceable; (g) A change shall have been made in the Statement of Policies and Procedures or the Pricing Policy Statement without the Bank's consent; -9- (h) A subsidiary or any other entity shall have been created or acquired or taken over by BIDC or BDB, if such creation, acquisition or taking over would adversely affect the conduct of BIDC or BDB's business or BIDC or BDB's financial condition or the efficiency of BIDC or BDB's management and personnel or the carrying out of the Project; and (i) (1) Subject to subparagraph (2) of this paragraph: (A) the right of the Borrower to withdraw the proceeds of the CDB Loan shall have beev suspended, cancelled or terminated in whole or in part, pursuant to the terms of the agreement providing therefor; or (B) the CDB Loan shall have become due and payable prior to the agreed maturity thereof. (2) Subparagraph (1) of this paragraph shall not apply if: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obliga- tions under such agreement; and (B) adequate funds for the Project are avail- able to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement. Section 5.02. For the purposes of Section 7.01 of the General Conditions the following additional events are specified pursuant to paragraph (h) thereof: (a) the event specified in paragraph (d), (e), (f), (g), or (i)(1)(B) of Section 5.01 shall occur; and (b) the event specified in paragraph (a), (b) or (h) of Section 5.01 shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower. - 10 - ARTICLE VI Effective Date; Termination Section 6.01. The following is specified as an additional matter, within the meaning of Section 12.02 (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank, namely, that the Project Agreements have been duly authorized by BIDC and BDB, and are legally binding upon BIDC and BDB in accordance with their respective terms. Section 6.02. The date ' , is hereby speci- fied for the purposes of Sec ion 2.04 of the General Conditions. ARTICLE VII Representatives of the Borrower; Addresses Section 7.01. The Minister of Finance and Planning of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Minister of Finance and Planning Ministry of Finance and Planning Government Headquarters Bay Street, St. Michael Barbados Cable address: Telex: EXTERNALBAR WB 222 Barbados For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America - 11 - Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have,caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. BARBADOS By Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By// 4y4aV 6 Regional Vice President Latin America and the Caribbean - 12 - SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be finance-d out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Industrial Estates and Investment Promotion: (a) Industrial 5,000,000 50% Estates (b) Investment 600,000 100% of foreign Promotion expenditures (c) Technical 400,000 100% of foreign Assistance expenditures (2) Industrial Lending: (a) Sub-loans 3,000,000 100% of dis- bursements but not exceeding 70% of the total cost of an indus- trial project (b) Technical 200,000 100% of foreign Assistance expenditures (3) Export Promotion 300,000 100% of foreign expenditures - 13 - Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (4) Vocational and 500,000 100% of foreign Management expenditures Training TOTAL 10,000,000 2. For the purposes of this Schedule the term "foreign expendi- tures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower. 3. The disbursement percentages have been calculated in com- pliance with the policy of the Bank that no proceeds of the Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Loan decreases or increases, the Bank may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Bank. 4. (a) Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (i) payments made for expenditures prior to the date of this Agreement; or (ii) a sub-loan unless (A) the sub-loan shall have been approved by the Bank or the sub-loan shall be a free limit sub-loan for which the Bank shall have authorized withdrawals from the Loan Account, or (B) the positions of Financial Comptroller and Manager of Operations have been filled by BDB in accordance with Section 2.01 (:) of the BDB Project Agreement, or (iii) any expenditures under Categories (1) and (2) unless the Subsidiary Loan Agreements have been duly signed. - 14 - (b) A free-limit sub-loan shall be a sub-loan (other than the first five of sub-loans sent to the Bank) in an amount to be financed out of the proceeds of the Loan which shall not exceed the sum of $150,000 equivalent, when added to any other outstanding amounts financed or proposed to be financed out of the proceeds of the Loan, said sum being subject to change from time to time as determined by the Bank. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Bank shall have reasonably' determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such iteL: shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the Loan as, in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. - 15 - SCHEDULE 2 Description of the Project The Project which is designed to assist the Borrower's industrial development program consists of the following Parts: A. Industrial Estates and Investment Promotion (1) Land development at Speightstown, Grantley Adams and Six Roads including construction of an access road to site of factory buildings, levelling and compacting of the site and construction of internal roads, storm drainage system and sidewalks, water supply and the main electrical distribution network. (2) Construction of about 35 factory buildings on about 30 acres of improved land in existing industrial estates at Six Roads, Grantley Adams and Newton and in a new estate at Speightstown and any other location that may be agreed between the Borrower and the Bank, with power, water and-waste disposal facilities. (3) Investment promotion including promotional travel, advertising, seminars, public relation activities and provision of consulting services for such promotional activities. (4) Training of BIDC's staff (including overseas train- ing) in pricing policies, lease contract format and terms and conditions, quantity surveying, site supervision and other indus- trial estates development subjects; technical assistance to the Research and Planning Division of BIDC on industrial subsector studies, small scale industry project identification and evalua- tion of applications for fiscal incentives. (About 57 man-months of consultants' services will be required). B. Industrial Lending Program (1) Provision of medium and long-term financing to industry. (2) Strengthening of BDB in project identification, apprai- sal and supervision and in other relevant operations and activi- ties; and training of BDB staff (including overseas training) in project analysis, loan administration and other relevant subjects. (About 30 man-months of consultants' services will be required). - 16 - C. Export Promotion Program (1) Expansion of locally manufactured exports; and provision of services to firms interested in opening new markets, selling new export products or expanding exports of manufactures. (2) Organization and staffing of EPC including provision of necessary technical assistance. (3) Study of current export incentives system available to Barbadian manufacturers to identify incentives required to support exports outside the Caribbean Region. D. Vocational and Management Training Programs (1) Strengthening of the Borrower's vocational training program including technical assistance to NTB: (i) to carry out the Borrower's apprentice schemes, (ii) to establish a vacancy information and placement service, (iii) to improve the Borrower's labor statistics collection and processing system, (iv) to expand the Borrower's skills training program, and (v) to establish a job classification, testing and certification system. (2) Consolidation and expansion of BIMAP's management training development activities and technical assistance to develop training materials to be used in its management train- ing courses. The Project is expected to be completed by September 30, 1983. - 17 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in doJ,lrs)* On each June 1 and December 1 beginning December 1, 1983 through December 2, 1994 415,000 On June 1, 1995 455,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. - 13 - Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05 (b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 1.65% More than three years but not more than six years before maturity 3.30% More than six years but not more than eleven years before maturity 6.00% More than eleven years but not more than thirteen years before maturity 7.15% More than thirteen years before maturity 8.25% INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this ' day of Q 4,1980-. FOR SECRETARY