CDB participates in $100 million syndicated bridge loan for Bogotá Metro Line 1 (23.9KM) PPP Project (Linked to Record ID#92574)

Project narrative

On November 27, 2019, Empresa Metro de Bogotá S.A. (Metro de Bogotá) — a Colombian state company incorporated in 2016 to carry out the planning, structuring, construction, operation, commercialization and maintenance of the new Bogotá Metro — awarded a 26-year, design, build, finance, operate, and maintain (DBFOM) contract to Apca Transmimetro (a Chinese consortium consisting of China Harbour Engineering Company and Xi'An Metro Company Limited) for the Bogotá Metro Line 1 (23.9KM) Public-Private Partnership (PPP) Project. This followed consultancy work undertaken by in 2019 by a Spanish consortium of Ardanuy Ingeniería and FGC and a tendering process launched by the Colombian government in August 2019. Apca Transmimetro competed against five other consortia for the $4.3 billion contract to design, build, finance, operate, and maintain Line 1 of the Bogotá metro. It received 100 points in the tender process, compared with 94.54 points for Consorcio Metro de Bogotá, the second most competitive bidder. APCA Transmimetro signed a 20-year concession contract with Empresa Metro de Bogotá (EMB) in October 2020. Then, in November 2021, Metro Línea 1 S.A.S. — a special purpose vehicle (SPV) and joint venture of China Harbour Engineering Company (85% equity stake) and Xi'An Metro Company Limited (15% equity stake) — signed two syndicated bridge loan agreements for the Bogotá Metro Line 1 (23.9KM) Public-Private Partnership (PPP) Project: a $178,539,605 syndicated bridge loan agreement with Bancolombia and BBVA Colombia and a $100 million syndicated bridge loan agreement with China Development Bank and the Panama Branch of Industrial and Commercial Bank of China (ICBC). The syndicated loan from ICBC and CDB (contract identification number 155693110-2-2020 DV 6) carried a 3.55 year maturity (final maturity date: May 19, 2025) and an annual interest rate of 3-month SOFR plus a 1.42% margin. It was backed by a repayment guarantee from CHEC. The first CDB/ICBC loan disbursement took place on August 30, 2022. The loan's principal amount outstanding was $67,514,421 as of December 31, 2022. CDB’s estimated contribution is captured via Record ID#92573. The estimated contribution of ICBC is captured in Record ID#92574. The borrower was expected to use the proceeds of the loan to fund the pre-construction phase of the Bogota Metro Line 1 (23.9KM) PPP Project. More specifically, the borrower was expected to use the proceeds of the loan to finance the remainder of the project’s design phase plus the necessary preparation works for construction to begin in January 2023. Metro Line 1 is expected to be 23.96 kilometers in length and include 16 stations (connecting Portal de las Américas and Calle 72 in the city of Bogotá) and thirty 7-carriage trains, designed according to the U-shaped beam of the viaduct, with a rated operating speed of 42 kilometers per hour. Upon completion, the line is expected to carry around 130,000 people a day and mostly use an existing railway alignment to connect the capital city of Bogotá with the municipalities of Facatativá, Madrid, Mosquera and Funza in Cundinamarca province. FDN — a local development bank — provided financing for a 2.8 km line extension in order to take Metro Line 1 up to Calle 100 with 2 more intermediate extensions. 10 of the stations along Metro Line 1 will have direct connection to the city's Transmilenio bus rapid transit (BRT) system. Metro Line 1 is expected to have strong ESG credentials, as it will use natural light and ventilation (being built above ground on a viaduct) entirely electric trains. Construction was originally expected to end in September 2027, with Metro Line 1 beginning commercial operations in April 2028. Metro Line 1 will form a commuter corridor in western Bogotá, also known as Western RegioTram. China Civil Engineering Construction Corporation (CCECC), a subsidiary of China Railway Construction Corporation (CRCC), is the general EPC contractor responsible for project implementation. CRRC Changchun do Brasil Railway Equipamentos e Servicos Lda, the Brazilian subsidiary of Chinese state-owned CRRC Changchun Railway Vehicles Co. Ltd, and Bombardier Inc. (a Canadian maker of trains) are subcontractors. Metro Línea 1 S.A.S. achieved financial close on December 2, 2021, which typically represents the date of the first loan disbursement. However, several months earlier, on August 17, 2021, a groundbreaking ceremony was held to mark the beginning of the construction of the rail yard of Metro Line 1. Another groundbreaking ceremony to mark the start of construction of Annie Depot, located in the Sali district of Bogotá, was held on June 23, 2022. Then, under the syndicated bridge loan agreement, ICBC made a $14 million disbursement on August 30, 2022 and a $23 million loan disbursement on January 17, 2023. The first low-floor, six-section articulated LRV for the project rolled off the assembly line at CRRC Changchun Railway Vehicles in September 2022. The LRV, with a front contoured in the shape of an Andean condor and special insulation and heat dissipation features to make it suitable for a high-altitude climate, has a length of 105 meters and can carry up to 1220 people. The Bogotá Metro Line 1 PPP project has encountered a number of delays and controversies. Under the terms of the November 27, 2019 DBFOM contract, Apca Transmimetro was given 810 days to deliver the engineering and detailed designs for the project. This deadline was originally scheduled for January 8, 2023. In December 2022, Empresa Metro de Bogotá S.A. (Metro de Bogotá) reportedly knew that Apca Transmimetro was not going to meet its contractual obligation to deliver the engineering and detailed designs for the project, so it signed a contract modification to extend the deadline until March 30, 2023. Then, several days before the revised deadline of March 30, 2023, Empresa Metro de Bogotá S.A. (Metro de Bogotá) set another new deadline of April 14, 2023. Apca Transmimetro also reportedly failed to meet its contractual obligation to achieve financial close with its lenders by November 29, 2022 (for a minimum amount of 2.4 trillion Colombian pesos or roughly $610 million). Apca Transmimetro ultimately achieved financial close with its lenders on December 5, 2022. It initially signed Colombian peso-denominated bank loan agreements with Bancolombia and BBVA and a commercial factoring agreement with CCCC Financial Leasing Company Limited. However, it subsequently signed a USD-denominated, limited recourse project finance agreement with Bank of China and ICBC on January 18, 2023. Then, in September 2023, Semana (a Colombian magazine) published a classified dossier, detailing improper monetary transactions related to the construction of the Bogotá Metro Line 1. The transactions involved a Chinese national, a former Colombian Transport Ministry employee, and prominent political figures. Intercepted conversations led the Colombian authorities to launch a corruption investigation, according to Semana. The most alarming recordings occurred between January and March 2022, immediately preceding Colombia’s congressional elections. The recordings details the payment of bribes worth more than $2.7 million. Of this sum, approximately $2 million went to the Alianza Verde political party to finance legislative campaigns in exchange for contracts related to the Bogotá Metro Line 1 PPP project. The Colombian Attorney General’s Office announced that it would investigate these possible acts of corruption that could put at risk the resources of the public treasury. CHEC denied any connection to allegations of corruption in the construction of the metro, according to El Espectador (a Colombian newspaper).