CDB provides $150 million loan (Tranche B) for Autopista al Mar 2 Project (Linked to Project ID#54591)

On November 25, 2015, the Government of Colombia's National Infrastructure Agency (ANI) signed a 25-year design-build-finance-operate-maintain (DBFOM) concession agreement with Autopistas Urabá S.A.S., giving it the right to finance, design, construct, operate, and maintain a 254 km toll road (known as Autopista al Mar 2). The total estimated cost of this public-private partnership (PPP) project is $891 million and it is being financed with a mix of debt and equity. On July 24, 2019, China Development Bank (Shandong Branch) and Autopistas Urabá S.A.S. — a project company (special purpose vehicle) that is jointly owned by China Harbour Engineering Company Limited Colombia (65% equity stake), SP Ingenieros S.A.S. (20% equity stake), Unidad de Infraestructura y Construcciones Asociadas S.A.S. or UNICA (15% equity stake), and Termotécnica Coindustrial S.A.S. (5% equity stake) — signed a $417.7 million loan agreement for the Autopista al Mar 2 Project. CDB provided the loan proceeds in two separate tranches: a $267.7 million tranche (known as Tranche A) with a 12 year maturity, an interest rate of LIBOR plus a 3.05% margin (during the construction phase), a 2% management fee, a 1.2% commitment fee, and a 0.54% arrangement fee (captured via Project ID#54591); and a $150 million tranche (known as Tranche B) with a 16 year maturity, an interest rate of LIBOR plus a 2.95% margin (during the construction phase), a 2% management fee, a 1.2% commitment fee, and a 0.54% arrangement fee (captured via Project ID#89458). As a source of security (collateral), the Government of Colombia guaranteed a minimum level of toll collection revenue (known as VPIP) over a 25-29 year period. In total, Autopistas Urabá S.A. secured approximately $652 million of debt financing for the Autopista al Mar 2 Project, including an $84 million loan from Sumitomo Mitsui Bank Corporation (SMBC) and a COP 500 billion (approximately $150 million) loan from Financiera de Desarrollo Nacional S. A. (FDN). The SMBC loan carries a 16 year maturity and an interest rate of LIBOR plus a 3.05% margin (during construction). The FDN loan carries a 16 year maturity an interest rate of CPI plus a 7.5% margin. The loan proceeds are to be used by the borrower (Autopistas Urabá S.A.S.) to finance a commercial (EPC) contract that it signed with a consortium (consisting of China Harbour Engineering Company Limited Colombia, SP Ingenieros S.A.S., Unidad de Infraestructura y Construcciones Asociadas S.A.S., and Termotécnica Coindustrial S.A.S.) on July 17, 2019. Paul Hastings LLP was the law firm that represented the syndicate of lenders. With trade tensions between the US and China escalating, CHEC took the decision to switch the documentation for the deal from New York law to English law. The switch meant taking on new sets of lawyers and making sure the contract documentation aligned with English law. The Autopista al Mar 2 Project involves a 254 km toll road that will connect Cañasgordas to Necoclí, in Antioquía, a department in north-west Colombia. Under the terms of the concession agreement, Autopistas Urabá S.A.S. is responsible for upgrading the section of the highway between Cañasgordas and Uramita (28km); constructing a new highway segment between Uramita and Dabeiba (17.7km), while operating and maintaining the existing road connection; upgrading the road linking Dabeiba to Mutatá (53km); rehabiliating the highway linking Mutatá to El Tigre (47km); and operatiing and maintaining the existing highway between El Tigre and Necoclí (106km). The Autopista al Mar 2 project also involves the construction of 62 bridges and 12 tunnel stretches. China Harbour Engineering Company Limited Colombia, SP Ingenieros S.A.S., Unidad de Infraestructura y Construcciones Asociadas S.A.S., and Termotécnica Coindustrial S.A.S are the EPC contractors responsible for implementation. Construction reportedly commenced in August 2018. However, the first CDB loan disbursements (Tranche A and Tranche B) did not take place until November 5, 2019. The COVID-19 pandemic delayed project implementation. However, as of September 2021, the project had achieved a 58% completion rate. The construction phase of the Autopista al Mar 2 Project is expected to end in June 2022. In April 2022, all of the tunnels in this project was completed.

Additional details

1. This project is also known as the 4G–Autopista Mar 2 Public-Private Partnership Project, the AAM2 Project, and the 4G–Autopista Mar 2 Project. The Spanish project title is El Proyecto Autopista al Mar 2. The Chinese project title is 哥伦比亚马道斯Mar2高速公路项目. 2. Several sources incorrectly identify the face value of CDB as $470 million. 3. This project should not to be confused with Project ID#54885, which has a different commitment year and financiers. 4. There is evidence that this loan was restructured in 2020 (see https://www.ppulegal.com/en/lawyers/hernando-padilla/). This issue merits further investigation. 5. Financiera de Desarrollo Nacional (FDN) is Colombia's state-owned development finance institution. SMBC is a shareholder in FDN. 6. CHEC reportedly spent a lot of time putting in place foreign exchange hedges on the SMBC tranche and about $150 million of the CDB debt. 7. This project is one of 40 projects that comprise the Government of Colombia’s 4G Program — the Fourth Generation Toll Road Concession Program (Cuarta Generación de Concesiones). 8. The all-in interest rate (5.156%) was estimated by adding 2.95% to the average 6-month LIBOR rate in July 2019 (2.206%). 9. The July 17, 2019 EPC contract can be accessed in its entirety via https://www.dropbox.com/s/nmbs6qph5q0nbfo/433915806-MAR-2-Contrato-EPC-60719659-40-17-07-19-VF.pdf?dl=0

Number of official sources

10

Number of total sources

16