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Clifford Chance advises Banco Santander, S.A. on innovative Peruvian toll road project financing

10 June 2015

Clifford Chance advises Banco Santander, S.A. on innovative Peruvian toll road project financing

A cross-office Clifford Chance team has advised Banco Santander, S.A., on the USD 200 million financing of the Longitudinal de la Sierra – Tramo 2 toll road project in Peru, which is to be developed by a consortium formed by SACYR Concesiones, S.L.U. in Spain, and Sacyr Concesiones Peru S.A.C. and Constructora Málaga Hnos S.A. in Peru.

The deal, which was closed in an intensive eight week period to meet a government-imposed deadline for reaching financial closing, represents one of several recent projects undertaken by the firm in advising investors on Peru's innovative regime of government-backed securities to finance public infrastructure. Recent examples include the firm's representation of Credit Suisse and Banco Espirito Santo de Investimento in the $237 million RPI-backed bond offering for the Red Dorsal Nacional de Fibra Optica project and advising the sponsors in the development of Line 2 of the Lima and Callao Metro.

This deal was notable as it marks the first ever international financing of a Peruvian milestone-based project structured through a construction loan facility, accomplished using a novel waterfall and account structure to optimize the collateral consisting of government payments named "PAMPIs." Until now, all Peruvian projects that benefited from government-backed securities which were financed internationally have been structured as securitizations in the international capital markets.

In addition to advising on bankability issues on the EPC contract, trust structure for the government payments and the concession agreement, the firm assisted Banco Santander, S.A. in Spain and Chile with structuring and negotiating all loan documentation, sponsor support, hedging and intercreditor arrangements for the transaction.

The team was led by partners Gianluca Bacchiocchi in New York and José Guardo in Madrid, and senior associate Martin Menski in Washington, DC with assistance from Diego Harman (New York), Alejandro León (Madrid), Jeffrey Susskind (Sao Paulo), Lauran Smith (Washington, DC), and Greg Kahn and David Felsenthal on the hedging aspects from New York.

Members of the firm's Latin American practice have extensive experience advising on road transactions in Peru, Latin America and around the world, making them very familiar with the regulatory framework, legal practices and financings involving these long-term concessions or leases in Peru and Latin America. Team members have advised on many of the region’s most historic infrastructure transactions, including the IIRSA Toll Roads, Huascacocha and Taboada Water Projects, Panama Canal Expansion, Lima Airport in Peru and the Rodoanel Ring Road in Brazil.