ICBC reprofiles debt service payments under $4.714 billion syndicated loan for 1,740 MW Néstor Kirchner and Jorge Cepernic Hydroelectric Power Plant Construction Project (Linked to Record ID#59724, 37002, 59723, 105525, and 105847)

Project narrative

On August 1, 2014, Argentina’s Ministry of Economy and Public Finance signed a $4,714,350,000 syndicated term facility (loan) agreement with Bank of China, China Development Bank, and ICBC for the 1,740 MW Néstor Kirchner and Jorge Cepernic Hydroelectric Power Plant Construction Project. The loan agreement was later amended on January 27, 2015 and again in mid-2022. CDB, ICBC, and Bank of China contributed $2,498,605,500, $1,414,305,000, and $801,439,500, respectively, to the syndicated loan. Record ID#59724 captures BOC’s contribution, while Record ID#37002 captures CDB’s contribution and Record ID#59723 captures ICBC’s contribution. The syndicated term facility agreement carried the following borrowing terms: a 15.5 year maturity, a 5.5 year grace period, an interest rate of 6-month LIBOR plus an 3.8% margin, a default (penalty) interest rate of 1.5%, a commitment fee of 0.125%, and an upfront (one-time) management fee of 0.20%. As a credit enhancement, the borrower purchased a buyer’s credit insurance policy from Sinosure worth approximately 7.1% of the face value of the loan ($502,976,000). This measure was demanded by CDB as a condition of disbursement. The syndicated loan agreement also included a cross-default clause, which stated that if the borrower canceled the project, CDB financing for the Belgrano Cargas railway line project (captured via Record ID#36517) with the Government of Argentina would also be canceled. The borrower was expected to use the loan proceeds to finance approximately 85% of the cost of a $5,559,610,000 commercial contract between the Government of Argentina’s Ministry of Energy and the Unión Transitoria de Empresas (UTE) Consortium (established by China Gezhouba Group Company Limited, Electroingeniería S.A. and Hidrocuyo S.A.), which was signed on October 31, 2013 and amended on August 20, 2013, January 29, 2014, July 10, 2014, February 9, 2015, August 31, 2016, January 20, 2017, May 31, 2017, February 1, 2018, September 4, 2020 and December 15, 2020. The loan had achieved a 20.1% disbursement rate ($950,000,000 out of $4,714,350,000) as of November 2015, a 28.6% disbursement rate ($1,350,000,000 out of $4,714,350,000) as of May 2022, a 39.2% disbursement rate as of December 2022 ($1,849,000,000 out of $4,714,350,000), and a 49.8% disbursement rate of June 2022 ($2,349,000,000 out of $4,714,350,000). The loan was originally scheduled for repayment in 20 semi-annual installments between July 2020 and January 2030, with the first repayment date (July 28, 2020) falling 66 months after the financial closing date (January 28, 2015) and the final maturity date falling 180 months after the financial closing date (January 28, 2030). The loan's (principal) amount outstanding was $850,000,000 as of December 31, 2015, $850,000,000 as of December 31, 2016, $1,350,000,000 as of December 31, 2017, $1,350,000,000 as of December 31, 2018, $1,350,000,000 as of December 31, 2019, $1,282,500,000 as of December 31, 2020, $1,147,500,000 as of December 31, 2021, and $1,300,471,229 as of December 31, 2022. As of 2022, the borrower had paid the Sinosure insurance premium in full. Then, on May 26, 2022, Argentina's legislature authorized the Minister of Economy to sign an amended version of the syndicated loan agreement (ID# IF-2022-07542376-APN-SSRFID#SAE) with Bank of China, ICBC, and CDB. Based on modifications to the October 31, 2013 commercial contract (via Addenda Nos. III to IX) with the UTE consortium, the lenders and borrower determined that it was necessary to amend to loan agreement to (a) identify a new project owner (IEASA), (b) document the reduction in power generation capacity (from 1,740 MW to 1,310 MW) due to a rescoping of the project design, (c) modify the semi-annual repayment scheme, and (d) extend the loan availability period by 30 additional months (from July 27, 2020 until January 27, 2023). In the original syndicated loan agreement, the borrower was required to make equal, semi-annual principal payments (pg. 31). However, in the “amended and restated” version of the syndicated loan agreement, principal payments are backloaded (pg. 38). Here is the verbatim language: The Borrower shall repay the Loans in twenty (20) instalments (each a "Repayment Instalment") on the relevant Repayment Dates as follows: (i) the first Repayment Instalment shall be equal to one-twentieth of the Repayment Base Amount in respect of the first Repayment Date; (ii) the second Repayment Instalment shall be equal to one-nineteenth of the Repayment Base Amount in respect of the second Repayment Date; (iii) the third Repayment Instalment shall be equal to one-eighteenth of the Repayment Base Amount in respect of the third Repayment Date; (iv) the fourth Repayment Instalment shall be equal to one-seventeenth of the Repayment Base Amount in respect of the fourth Repayment Date; (v) the fifth Repayment Instalment shall be equal to one-sixteenth of the Repayment Base Amount in respect of the fifth Repayment Date; (vi) the sixth Repayment Instalment shall be equal to one-fifteenth of the Repayment Base Amount in respect of the sixth Repayment Date; and (vii) each of the seventh to twentieth Repayment Instalments shall be equal to one-fourteenth of all the Loans outstanding as at close of business in Beijing on the last day of the Availability Period.” The "Repayment Base Amount" means, in respect of each of the first six Repayment Dates, "the aggregate amount of: (a) all the Loans made and outstanding as at close of business in Beijing on the tenth Business Day immediately prior to that Repayment Date; and (b) all the Loans that are due to be made under the then proposed Utilisations with a proposed Utilisation Date after the tenth Business Day immediately prior to but on or before that Repayment Date.”