Colombia - Railroad Rehabilitation Project : Loan 0343 - Loan Agreement - Conformed

LOAN NUMBER 343 CO Loan Agreement (Railroad Rehabilitation Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND FERROCARRILES NACIONALES DE COLOMBIA DATED JUNE 21, 1963 LOAN NUMBER 343 CO Loan Agreement (Railroad Rehabilitation Project) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND FERROCARRILES NACIONALES DE COLOMBIA DATED JUNE 21, 1963 rJan Agrerment AGREEMENT, dated June 21, 1963, between INTERNA- TIONAL BA.TK FOR RECONSTRUCTION AND DEVELOPMENT (here- inafter called the Bank) and FERROCARRILES NACIONALES DE COLOMBIA (hereinafter called the Borrower). WHEREAS, by an agreement dated August 26, 1952 be- tween the Republic of Colombia (hereinafter called the Guarantor) and the Bank, the Bank agreed to lend to the Guarantor the sum of $25,000,000 or the equivalent thereof in currencies other than dollars to assist in financing the costs of a project included in a program of the Guarantor for the organization of the railway system of Colombia and for the expansion, rehabilitation and improvement of the lines operated by the Consejo Administrativo de los Ferrocarriles Nacionales or its successor organization; and WHEREAS, as contemplated by such agreement, the Bor- rower was organized by Decree No. 3129 of 1954 as an autonomous non-political organization to administer the railway system of Colombia on a financially self-supporting basis; and WHEREAS, by an agreement dated June 15, 1955 between the Bank and the Borrower, the Bank agreed to lend to the Borrower the sum of $15,900,000 or the equivalent thereof in currencies other than dollars to assist in a fur- ther expansion, rehabilitation and improvement of the railway system of the Borrower; and WHEREAS, by an agreement dated September 20, 1960 between the Bank and the Borrower, the Bank agreed to lend to the Borrower the sum of $5,400,000 or the equivalent thereof in currencies other than dollars to finance the foreign currency part of the cost of railroad equipment; and 4 WHEREAS the Borrower asked the Bank to finance the foreign currency part of the cost of additional railroad equipment and to assist in further rehabilitation of the railway system of the Borrower; Now THEREFORE, the parties hereto hereby agree as follows: ARTICLE I Loan Regulations SECTION 1.01. The parties to this Loan Agreement ac- cept 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. 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 thirty million dollars ($30,000,000). 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, and subject to the rights of cancellation and suspension set forth in, the Loan Agreement. SECTION 2.03. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4of 1%) per annum on the principal amount of the Loan not so withdrawn from time to time. SECTION 2.04. The Borrower shall pay interest at the rate of five and one-half per cent (51/2%) per annum on the principal amount of the Loan so withdrawn and outstand- ing from time to time. 5 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 (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 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 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. Except as the Bank and the Borrower shall otherwise agree, 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 exclusively in the carrying out of the Project. SECTION 3.03. Pursuant to the second sentence of Section 3.02 of the Loan Regulations, the Bank and the Borrower agree that any withdrawals on account of expenditures in the currency of the Guarantor or for goods produced in (including services supplied from) the territories of the Guarantor shall be made in such currency or currencies as the Bank shall reasonably select. 0 6 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 Administrador General of the Bor- rower 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 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 consultants under terms and conditions satisfactory to the Bank. (b) Upon request from time to time by the Bank, the Borrower shall promptly furnish or cause to be furnished to the Bank the plans, specifications and work schedules for the Project and any material modifications subsequently made therein, in such detail as the Bank shall reasonably 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. (d) The Borrower shall enable the Bank's representa- tives to inspect the Project, the goods, all other plants, 7 works, properties and equipment of the Borrower and any relevant records and documents. (e) The Borrower shall furnish to the Bank all such information as the Bank shall reasonably request concern- ing 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 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 interferes with, or threatens to interfere with, the accomplishment of the purposes of the Loan or tle 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 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 prop- erty, 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. 8 SECTION 5.04. The Borrower shall pay or cause to be paid all taxes, if any, imposed under the laws of the Guar- antor 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 taxation of 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, if any, imposed under the laws of the country or countries iin 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 execution, issue, delivery or registration of this Agreement, the Guarantee Agreement or the Bonds. SECTION 5.06. (a) The Borrower shall insure or cause to be insured with responsible insurers all goods financed out of the proceeds of the Loan. Such insurance shall cover such marine, transit and other hazards incident to purchase and importation of the goods into the territory of the Borrower and shall be for such amounts as shall be con- sistent with sound commercial practices. Such 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 take out and main- tain, with responsible insurers, insurance against such risks and in such amounts as shall be consistent with sound rail- way and business practices. SECTION 5.07. (a) The Borrower shall at all times main- tain its existence and right to carry on its operations and shall, except as the Bank shall otherwise agree, take all steps necessary to maintain and renew all rights, powers, 9 privileges and franchises which ale 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 equipment and maintain its financial position in accordance with sound business and railway practices. SECTION 5.08. The Borrower shall not without the con- sent of the Bank sell or otherwise dispose of any of its property and assets necessary for its operations unless the Borrower shall first redeem and pay, or make adequate provision satisfactory to the Bank for redemption or pay- ment of, all of the Loan which shall then be outstanding and unpaid. SECTION 5.09. Except as the Bank and the Borrower shall otherwise agree, the Borrower shall not incur, guar- antee or assume any indebtedness and shall not permit any subsidiary to incur, guarantee or assume any indebtedness, except for (i) indebtedness incurred, guaranteed or as- sumed in the normal course of business and (ii) indebted- ness to the Government. SECTION 5.10. Except as the Bank and the Borrower shall otherwise agree, the Borrower shall from time to time adjust its rates and fares, or take all steps necessary or desirable to obtain such adjustments in its rates and fares, as will provide revenues sufficient to cover fixed costs, costs of operation and maintenance, depreciation and re- serves, to maintain sufficient working capital and to provide for the purchase of equipment and betterments. 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 10 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 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. ARTICLE VII Miscellaneous SECTION 7.01. The Closing Date shall be June 30, 1966, or such other date as shall be agreed upon from time to time by the Bank and the Borrower. SECTION 7.02. A date ninety 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: Ferrocarriles Nacionales de Colombia Calle 13, No. 18-24 Bogota, Colombia Alternative address for cablegrams and radiograms: Ferrocarriles Bogota Colombia 11 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. 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 /s/ J. BURKE KNAPP Vice President FERROCARRILES NACIONALES DE COLOMBIA By /s/ LUCIANO ELEJALDE J. Authorized Representative 12 SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* November 1, 1966 $ 545,000 May 1, 1967 560,000 November 1, 1967 575,000 May 1, 1968 590,000 November 1, 1968 605,000 May 1, 1969 625,000 November 1, 1969 640,000 May 1, 1970 660,000 November 1, 1970 675,000 May 1, 1971 695,000 November 1, 1971 715,000 May 1, 1972 735,000 November 1, 1972 755,000 May 1, 1973 775,000 November 1, 1973 795,000 May 1, 1974 820,000 November 1, 1974 840,000 May 1, 1975 865,000 November 1, 1975 885,000 May 1, 1976 910,000 November 1, 1976 935,000 May 1, 1977 960,000 November 1, 1977 990,000 May 1, 1978 1,015,000 November 1, 1978 1,045,000 May 1, 1979 1,075,000 November 1, 1979 1,100,000 May 1, 1980 1,135,000 November 1, 1980 1,165,000 May 1, 1981 1,195,000 November 1, 1981 1,230,000 May 1, 1982 1,260,000 November 1, 1982 1,295,000 May 1, 1983 1,335,000 * 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. More than three years but not more than six years before maturity............ 1/2% 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% More than sixteen years but not more than eighteen years before maturity ........ . ./% More than eighteen years before maturity. . 51/% 14 SCHEDULE 2 Description of Project The Project is the portion of the Ten-Year Rehabilitation Program of the Borrower to be carried out during the five- year period 1963-1967. The Ten-Year Program is to re- habilitate and expand the facilities and equipment of the Borrower and to increase the efficiency and carrying capacity of its railroad in order to meet increasing traffic demands through 1972. The Project includes the acquisition, introduction into service and operation of about 2800 freight cars and 63 diesel locomotives, the purchase of component parts for about 200 freight cars, spare parts for diesel locomotives, steel for bridges and other railroad equipment and ma- terials, the purchase and installation of shop tools, the renewal of 545 kms of rail, services and training. The part of the Project to be financed with the proceeds of the Loan is a part of the Ten-Year Program to be carried out during the years 1963/1964, namely, the acquisi- tion, introduction into service and operation of about 1150 freight cars and about 37 diesel locomotives, the purchase of component parts for about 200 freight cars, spare parts for diesel locomotives, steel for bridges and other railroad equipment and materials, the construction of shops, the purchase and installation of shop tools, rails and acces- sories for the renewal of about 210 kms of rail, services and training.