BKM Berkemeyer participates in the legal structuring of USD 433 million infrastructure project

By BKM | Berkemeyer

BKM Berkemeyer advised a consortium called Consorcio Corredor Vial Bioceánico, formed by companies Ocho A S.A. and Constructora Queiroz Galvao (each with a 50% participation), to obtain financing of USD 433 million for the execution of the project "Loma Plata-Carmelo Peralta Bioceanic Corridor", tendered in the framework of Law 5074/13, popularly known as the turnkey law. The financing consisted mainly of two transactions:

1) International issuance of debt securities: On May 9, 2019 it took place the issuance of 144A/REG S bonds under New York law by an SPV, of which BKM Berkemeyer participated as the structuring agent of the UBS A.G operation. The issuance was for an amount of USD 433 million, for a term of 15 years and at an interest rate of 5.375%. The proceeds of the issuance (for the total amount of the necessary investment) will go towards the purchase of Certificates of Payment Recognition (CROP) to be issued by the Paraguayan government as the contractors end each of the 20 sections into which the work is divided. The CROP, which have a sovereign guarantee, are issued as a result of the provisional reception by the contracting party of each of the 20 sections and consist of a direct, unconditional and irrevocable payment obligation.

2) Revolving loan for working capital: BKM Berkemeyer locally assist the consortium in the negotiations of a revolving loan from the Banco Nacional de Fomento, Banco Atlas S.A., Banco Regional and Banco Sudameris, all from Paraguay. The contract consists of a revolving loan for up to USD 60 million that will be used to finance the working capital related to the construction of each of the 20 sections, prior to the issuance of the corresponding CROP. In order to guarantee the payments of the revolving loan, BKM Berkemeyer has advised on the constitution of an administration and guarantee trust. 

The "Loma Plata-Carmelo Peralta Bioceanic Corridor” is part of a comprehensive infrastructure project that aims to develop Paraguay eastern region, being of vital importance since it would allow the development of the Chaco by connecting the region with the Pacific Ocean in Chile and the Atlantic Ocean in Brazil. It is expected that the second and third stage of the project will also be tendered this year and under the same contracting modality.

The role of BKM Berkemeyer in the operation was that of legal support to the consortium and sponsor in the negotiations with the international financiers, in the legal structuring of the local financing and in the guarantee trust. Martín Carlevaro, senior partner of BKM Berkemeyer, highlighted that the bioceanic corridor is a project of great importance for the country, since through it the Paraguayan Chaco will become the shortest passage between Chile’s ports on the Pacific Ocean and Brazil’s port on the Atlantic Ocean, with an original financing structure with an international component (144A/Reg S bonds) and another local one to finance working capital.