Bank of China contributes $30 million to $375 million syndicated loan tranche for Rumichaca-Pasto 4G Toll Road Project

On July 17, 2019, Concesionaria Vial Unión del Sur, S.A.S. – a consortium (joint venture) and special purpose vehicle comprising Sacyr (60% ownership stake) and Herdoíza Crespo Construcciones (40% ownership stake) – signed a $375 million syndicated loan agreement for the COP2.3 trillion ($740 million), 80 km Pasto-Rumichaca 4G Toll Road Project in Colombia. The $375 million commercial (first) tranche was led by JP Morgan and Banco Santander, taking $65 million each. ICO took $50 million; SMBC, Metlife and MUFG $45 million each; and Credit Agricole and Bank of China $30 million each. The loan carries an 8-year maturity (final maturity date: August 2, 2027) and a variable interest rate. A second tranche included a $200 million loan from the US government’s development finance institution, the Overseas Private Investment Corporation (OPIC), also with an 8 year maturity period. The security package for the loan (both tranches) constitutes substantially all of the assets of the issuer, Patrimonio Autonomo Union del Sur, and Concesionaria Vial Union del Sur S.A.S., the co-obligor. The collateral will also include certain reserve accounts, pledges of rights and stock, including stand-by letters of credit or other acceptable support instruments such as UPLI's liquidity facility, assignments of revenues, the concession and the transaction trust. Initial works were funded by the sponsors and a $60 million bridge loan from Santander group. FDN reportedly approved a COP150 billion loan at the end of March 2019, but it is unclear if the facility was finalised. Planned investment over the full 25-year life of the PPP concession is around $1 billion. The Rumichaca-Pasto is one of the four roads that Sacyr Concessions is developing in Colombia, within the Fourth Generation (4G) projects, launched by the Government of the South American country. The Rumichaca-Pasto project in the Department of Nariño is intended to improve the country's road connectivity, specifically in the border crossing to Ecuador, thereby promoting the socio-economic development of southwestern Colombia. More specifically, the project will add a second lane in both directions on an existing 82 km road that runs between the southern Colombian cities of Pasto and Ipiales (in the Nariño and Cauca departments) to Rumichaca on the country’s border with Ecuador. The project scope encompasses the construction of 25 km of double lane road and 52 km of second lane as well as the improvement of 57 km of existing road. It will require intervention on 11 bridges. The conversion of the 83-km toll road into a dual carriageway aims to provide connectivity between local and international markets (Ecuador) with indigenous and farmers' communities in the region's municipalities. The project includes the construction of seven bridges with a total length of approximately 1,670 meters and two toll stations: El Contadero and the replacement of the existing toll booth, El Placer. The project construction is divided into five subsections or functional units, three of which (FU3, FU4 and FU5) have been completed. The toll road project is expected to generate 3,594 direct and indirect jobs. FU2 was delivered for verification on Dec. 22, 2021, starting the corresponding 60-day verification period, with minor pending works expected to be concluded during this time period. Overall construction advancement is roughly 96% as of Dec. 15, 2021, with the completion of FU1 scheduled for March 2022. According to the Independent Engineer, outstanding and ongoing works in FU1 are considered of low complexity, and mainly comprise earthworks and final road construction, including slope stabilization works. In September 2020, Colombia's Ministry of Transportation approved and confirmed the toll station relocation of the Ipiales toll booth (contemplated initially under the concession agreement) to El Contadero (FU1) due to indigenous communities' opposition. Nevertheless, the Concessionaire will install traffic counting equipment in a control stand (shadow toll booth) located in La Josefina (FU2) as confirmed by the concession agreement amendment No. 7. The compensation for lower toll collection will be quarterly calculated and paid by the ANI, and equal to 90% of the difference between the toll collection that would have been collected at Ipiales and El Contadero's actual toll revenue collection. In a deal that achieved financial close on February 10, 2022, the project received additional financing in US dollars and Colombian pesos: a loan worth the equivalent of about $260 million in Colombian pesos from Colombian financial institutions (FDN, Bancolombia, Davivienda and UPI); a loan of $276.5 million in two tranches from international financial institutions (JPMorgan Chase Bank, Sumitomo Mitsui Banking Corporation, Société Générale, MUFG Bank, Ltd., N.A, Crédit Agricole Corporate and Investment Bank and Siemens Financial Services, Inc.); proceeds from the issue of a social bond (19 year maturity, Baa3 and BB+ rating from the rating agencies Moody’s and Fitch respectively) worth $262 million in Colombian pesos structured by Goldman Sachs and JP Morgan, as well as IDB Invest as an anchor investor; a $28.4 million Letter of Credit (LC) Facility (from unnamed international lenders); and a $78.9 million equivalent Colombian peso Liquidity Facility (Revolving Credit Facility) from FCP Deuda Infraestructura II Sura-Credicorp Capital. This deal may have been financing in addition to the previous syndicated loans, but according to Clifford Chance – one of the law firms advising the borrower in the February 2022 deal – it was refinancing previous debt obligations for the Rumichaca-Pasto 4G Toll Road Project, potentially including the $375 million syndicated loan tranche.

Additional details

1. Sacyr S.A. is a Spanish infrastructure operator and developer company based in Madrid. Herdoíza Crespo Construcciones is a private Ecuadorian firm. 2. Alston & Bird in New York and Philippi Prietocarrizosa Ferrero DU & Uría (Colombia) in Bogotá served as the advisers to the lenders. Milbank provided lender counsel to all participants. 3. On September 11, 2015, Concesionaria Vial Union del Sur S.A.S. was granted a 25-year concession for the construction and operation of the existing 83-kilometer Rumichaca-Pasto corridor, located in the Nariño department. The concession period began on Oct. 27, 2015, and can be extended up to a maximum of 29 years if the tolls collection net present value (VPIP) is not reached by the 25th concession anniversary. 4. Some sources list OPIC's contribution as $250 million instead of $200 million; this issue warrants further investigation.

Number of official sources

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