Clifford Chance

Clifford Chance advises on Pamplona-Cúcuta 4G toll road project in Colombia

International law firm Clifford Chance has advised JPMorgan and Banco Santander, as lead arrangers, and MUFG, Instituto de Crédito Oficial (ICO), JPMorgan, Banco Santander, Banco Latinoamericano de Comercio Exterior (Bladex), Allianz Capital Partners, MetLife, Inter-American Investment Corporation (IDB Invest), BlackRock and Financiera de Desarrollo Nacional (FDN), as lenders, noteholders, letter of credit issuers and/or hedge providers in connection with the refinancing of the project finance debt incurred to finance the construction and development of the Pamplona-Cúcuta 4G toll road in Colombia. The refinancing consists of the following tranches of debt issued and incurred by Fideicomiso Unión Vial Río Pamplonita, as issuer/borrower, with Unión Vial Río Pamplonita, as co-obligor:

(i) COP1.19 trillion (~US$288 million) 7.60% Senior Secured Series B/C UVR Indexed Social Notes due 2041 offered and sold pursuant to Section 4(a)(2) under the Securities Act of 1933,
(ii) US$112 million 8.21% Senior Secured Series A Social Notes due 2041 offered and sold pursuant to Section 4(a)(2) under the Securities Act of 1933,
(iii) US$165.3 million in dual tranche New York-law governed loans, and
(iv) COP3.23 billion (~US$77 million) in Colombian law-governed loans.

The refinancing also includes credit enhancements in the form of a US$66 million reserve LC facility to backstop certain debt service and operation and maintenance reserve requirements.

The 62-kilometer Pamplona-Cúcuta toll road is part of the fourth generation (4G) concession program led by the Government of Colombia through the National Infrastructure Agency (ANI). The project will connect the towns of Pamplona and Cúcuta, through the municipalities of Pamplona, Pamplonita, Bochalema, Chinácota and Los Patios, located in the Norte de Santander department, on the eastern border with Venezuela. The project aims to improve mobility in Colombia and bolster social and economic development and growth in the northeastern region of Colombia.

This transaction represents the largest infrastructure project-related social bond issuance to this date in Latin America, and it is expected to contribute to and promote the following UN Sustainable Development Goals:

• No Poverty (SDG1)
• Decent Work and Economic Growth (SDG8)
• Industry, Innovation and Infrastructure (SDG9)
• Sustainable Cities and Communities (SDG11)

The notes and loans are also aligned with the four core components of the Social Bond Principles 2021 of the International Capital Market Association (ICMA) and the LMA/APLMA/LSTA's Social Loan Principles 2021.

Lead partner Fabricio Longhin commented, "Our extensive experience with Colombia's 4G program allows us to approach each new transaction as a new challenge. In this case, we leveraged our broad range of expertise and our global network to give life to a bespoke financial and documentary structure that streamlined negotiations and simplified the Sponsors' post-closing transaction management all the while responding to specific requirements from various financing parties."

Working with Longhin were partners Mariana Estévez, Hugo Triaca and Jon Zonis, associates Fernando Liu and David Rondón and law clerk Mariana Gutiérrez Ruiz in New York; and associate Daniel Justus in Washington, DC. Additional support was provided by:

• Tax: partner Avrohom Gelber and associate Allison Kelly (New York)
• Derivatives: partner Darren Littlejohn and associate Elizabeth Kennedy (New York)
• Global Financial Markets: partner José Guardo, abogados Eduardo Sánchez and Gabriel Miranda (Madrid)

Clifford Chance has wide-ranging experience advising on toll road transactions in Latin America, and is uniquely experienced in guiding clients through the various financing structures and regulatory frameworks involved in long-term concessions in Latin America. The firm has been at the forefront of the Colombian 4G program, having acted in more 4G project financings – including the Rio Magdalena 2, Pacifico Tres, Costera, Perimetral, Alto Magdalena, Ruta al Mar, and Rumichaca-Pasto toll road projects – than any other international law firm.