“Crescere IV” Financial Trust for $ 32,832,412

Deal counsel in the issuance and placement in Argentina of trust securities for $ 32,832,412 issued under the “Crescere IV” Financial Trust, in which Banco de Galicia y Buenos Aires S.A. acted as arranger and placement agent, TMF Trust Company (Argentina) S.A. acted as financial trustee, Syngenta Agro S.A. acted as trustor and servicer and Banco de la Provincia de Buenos Aires as placement agent.

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Integración Eléctrica Sur Argentina S.A.’s AR $123,535,244 Class Vi Bonds Issuance

Deal counsel in Integración Eléctrica Sur Argentina S.A.’s issuance of Class VI Bonds for AR$ 123,535,244 under the global Program of Short Term Notes for an amount up to U$S 50,000,000. AdCap Securities Argentina S.A. acted as organizer and placement agent of the Company’s Class VI Short Term Notes.

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Public-Private Partnership Agreements – Preliminary Terms for National and International Public Tender Power Transmission Works

On September 21, 2018, the Secretary of Public-Private Partnership (the “SPPP”) has made available in its website, the preliminary tender terms (the “Preliminary Tender Terms”) for the first-high voltage power transmission lines under a new public-private partnership (“PPP”) scheme. The awardee will be selected as contractor (the “PPP Contractor”), who will undertake the construction and further operation and maintenance of the 500 kV high-voltage line, the future substations Río Diamante and Charlone, and complementary works (the “Project”).

The preliminary PPP Agreement (the “PPP Agreement”), the Preliminary Tender Terms and its appendixes contain the main characteristics of the Project as of September 21, 2018.

The awarded bidder will execute a PPP Agreement for a total fifteen-year term. The PPP Agreement comprises (i) a construction period (the “Construction Period”), for the term comprised within its execution and commercial operation date (“COD”), term that may not exceed the maximum a term of thirty-six (36) months; and (ii) further to COD, an operation and maintenance services period (the “O&M Period”), up to the fifteenth (15) year as from its execution.

The Project’s total compensation –CAPEX and OPEX– (the “Required Total Amount”) will be due and payable by means of (i) investment payment titles (“TPI”, for its Spanish acronym) equivalent to 90% of the Required Total Amount, and (ii) a residual compensation (the “Residual Compensation”) equivalent to 10% of the Required Total Amount. Both will be issued and paid by and individual PPP Trust (Fideicomiso Individual PPP Transmisión Eléctrica and hereinafter, the “PPP Trust”), which will be constituted specifically for the Project and in order to manage issuance and payments due to the PPP Contractor. For specifics about this matter, please refer to point 9 below.

The Argentine government, through the Secretary of Government of Energy (the “SGE”), currently under the Ministry of Treasury, shall provide funding to the PPP Trust by yearly budgetary contributions. The PPP Trust will also receive those funds collected by the Compañía Administradora del Mercado Mayorista Eléctrico S.A. (“CAMMESA”), related to charges under Resolution No. 1085/17 of the former Secretary of Energy.

The relevant authorities in relation to the Project are: (i) the SGE, as convening authority of the tender, and (ii) Integración Energética Argentina S.A. (the “Contracting Entity”), successor of former Energía Argentina S.A. (“ENARSA”).

Schedule, final terms and conditions of the tender are yet still to be defined. A consultation period and a deadline for the tender of bids will be specified in such schedule.

It should be noted that, due to the preliminary nature of the documents and the fact that the SPPP will be publishing complementary information regarding the Project, the information contained herein may be updated in the future and therefore, subject to further modifications In this respect, we will be closely following this process and inform any relevant updates as soon as possible.

The most relevant aspects of the Preliminary Tender Terms are summarized below:

1) Selection process

The selection process of the PPP Contractor will be implemented through a two-stage national and international tender procedure.

2) Main rules

The main legal rules and documents to be considered regarding the Preliminary Tender Terms are comprised by the following: (i) Law No. 27,328 and its regulatory Decree No. 118/2017; (ii) Law No. 27,431, which approved the national budget for the current 2018 year; (iii) the 2019 period national budget law1; (iv) the PPP Agreement; (v) the agreement and rules of the Law 27,431 PPP Trust; (vi) the Trust Agreement; (vii) Trust joinder agreement; (viii) Resolution No. 1/2017 issued by the SPPP; (ix) Resolution No. 1/2018, issued by the SPPP; and (x) specific regulations of the electricity regulatory framework, such as (a) Laws No. 15,336 and 24,065; (b) their regulatory decrees (i.e., Decrees No. 1398/1992 and 186/1995), and (c) the Procedures for Programming the Operation, the Dispatch and Calculation of Prices, approved by the former SEE Resolution No. 61 dated April 29, 1992, as amended and supplemented to date.

3) Tender documents

The final tender terms and conditions will be published by the SPPP. Clarifying circular letters (circulares aclaratorias) may be issued upon queries of the bidders, which shall be performed no less than fifteen (15) days as from the date set forth as deadline for bid submission.

4) Bidders

  • Legal capacity: bidders may accredit their legal capacity by any of the following: (i) having an address in the Republic of Argentina; (ii) having its principal place of business in the Republic of Argentina; or (iii) being dully registered as a branch.
  • Limitations: the same legal entity or may not integrate different bidders. However, a bidder may be integrated by two or more legal entities or persons, in which case they will be held as jointly and severally liable vis-à-vis the SGE.
  • Corporate purpose and term: the corporate purpose of those legal entities acting as bidders or members of a bidder must allow their performance as bidders and, subject to being awarded, PPP Contractor. The term of these legal entities must be, for at least three (3) years greater than the total duration of the PPP Agreement.
  • Restrictions: certain restrictions are set forth in the tender documents (i.e., corporation matters, anti-corruption).
  • National component: minimum thresholds for national component are mandatory.
  • Minimum capital stock: the PPP Contractor must subscribe a capital stock of at least 0,1% of the Required Total Amount as follows:
    1. 25%, concurrently with the execution of the PPP Agreement.
    2. 50%, at the sixth (6) month anniversary as from the execution of the PPP Agreement.
    3. 75%, at the twelfth (12) month anniversary as from the execution of the PPP Agreement.
    4. Outstanding balance, at the eighteenth (18) month anniversary as from the execution of the PPP Agreement.
  • Prior to the execution of the PPP Agreement, the awarded bidder must incorporate the PPP Contractor as a sociedad anónima, which will act as a sole purpose vehicle.

5) Reference and alternative projects

The reference project comprises the design, construction, expansion, maintenance and operation of the Project, in accordance to the technical specifications, which must be complied with by the PPP Contractor. These are attached as Appendixes V, VI, VII, VIII, IX and X (the “Reference Project”).

Bidders must expressly indicate if they adopt the Reference Project or if they propose alternatives, in which case they must include a detail of their alternative project (the “Alternative Project”). Alternative projects must comply with the minimal technical requirements which are attached to the Preliminary Tender Terms as Appendix V.

If an Alternative Project fails to comply with the Preliminary Tender Terms’ minimal technical requirements or if the Alternative Project fails to obtain CAMMESA’s approval, the PPP Contractor must adopt the Reference Project with the same Annual Fee (as such term is defined below) than the one offered for the Alternative Project.

6) Bid formalities

Bids must be submitted in original or certified copies.

Bidders must submit the following documents:

  • Envelope No. 1: this envelope shall include the technical bid, which is comprised of (i) legal documents regarding the bidder and its legal capacity; (ii) documents which prove technical capacity and bidder’s track record, and (iii) documents which prove financial capacity of the bidder.

    With respect to the documents mentioned in point (ii), the bidder shall comply with the following requirements:

    1. Background on construction of high-voltage lines and substations:
      Requirements Acceptable minimum
      i. Civil works and mechanical and electromechanical assembly and erection of power transmission lines and of substation projects, which operate with a voltage equal or higher than 500 kV, with metallic structures, including control, protection and telecommunications systems, in the last twenty (20) years. - Length of high-voltage lines of no less than two-hundred and fifty (250) kilometers
      - 1 substation
      - 1 project in the last ten (10) years
      ii. Civil works and mechanical and electromechanical assembly and erection of substation projects, which operate with a voltage equal or higher than 500 kV, with metallic structures, in the last twenty (20) years. - Length of high-voltage lines of no less than two-hundred and fifty (250) kilometers.
      - 1 substation
      - 1 project in the last ten (10) years


    2. Background on provision of operation and maintenance services for high-voltage lines and substations:
      Requirements Acceptable minimum
      i. Power transmission lines and substations which operate with a voltage equal or higher than 500 kV maintenance, in the last twenty (20) years. Five (5) years
      ii. Power transmission lines and substations which operate with a voltage equal or higher than 500 kV operation, in the last twenty (20) years. Five (5) years


    3. Design engineering background:
      Requirements Acceptable minimum
      i. Preparation of electric studies and projects for 500 kV facilities One project of at least two-hundred and fifty (250) kilometers

      Bidders must submit a copy of those contracts or certificates issued by their contracting parties, for compliance with these standards.

      With regards to those requirements indicated in point b) above, the Preliminary Tender Terms do allow subcontracting as a way to comply with those minimum standards.

  • Envelope No. 2: this envelope must include the economic bid, which must be submitted using the forms attached in Appendix IV of the Preliminary Tender Terms.

    The economic bid must indicate a specific amount of an annual fee in US dollars (the “Annual Fee”)2. Preference will be granted to the bidder who bids the lowest Annual Fee.

7) Guarantees

Pursuant to the Preliminary Tender Terms, the following guarantees are mandatory and therefore required: (i) a bid bond, (ii) a financial close bond, and (iii) a main works bond.

Such guarantees must be constituted by the PPP Contractor in favor of the SGE as first-demand guarantees and may be constituted as (i) a bank deposit, (ii) a bank guarantee, and/or (iii) a stand-by letter of credit.

  • Bid bond:
    1. Amount: fifteen-million US dollars (US$ 15,000,000).
    2. Requirements: if bidders are integrated by more than one legal entity, the bid bond must be issued by the bidder’s controlling shareholder.
    3. Execution: the SGE shall be entitled to execute the bid bond in the event that (i) a bidder withdraws its bid in advance; (ii) a bidder forges information; (iii) the PPP Agreement is not executed; or (iv) a bidder fails to issue the main works bond or the financial close bond in accordance with the PPP Agreement.
    4. Term: one-hundred and twenty (120) days as from tender submission with automatic term renewal.
    5. Return: upon execution of the PPP Agreement and submission of the financial close bond and main works bond.
  • Financial close bond:
    1. Term: as from execution of the PPP Agreement and achievement of financial close.
    2. Initial amount: 2% of the Required Total Amount.
    3. Increases: if the financial close is not achieved by the PPP Contractor within the term of six (6) months since the PPP Agreement is executed, the PPP Contractor must increase the financial close bond in a 2.25% of the Required Total Amount for TPI. If financial close is not achieved within the term of nine (9) months, the financial close bond must be increased in a 2.75% of the Required Total Amount for TPI.
    4. Execution: the Contracting Entity may execute the financial close bond in the event that (a) the PPP Contractor does not achieve financial close upon the committed date (considering extensions); and/or (b) the PPP Contractor does not extend or renew the financial close bond.
  • Main works bond:
    1. Term: as from execution of the PPP Agreement once year further to COD.
    2. Initial amount: the amount of the main works bond shall be equal to: (a) as from the execution of the PPP Agreement, 2.5% of the Required Total Amount for TPI; and (b) from the financial close until one (1) year after the Project’s COD, to 4.5% of the Required Total Amount for TPI.
    3. Increases: the main works bond may be subject to renewals and increases in the event of late COD.
    4. Execution: the Contracting Entity may execute the main works bond in case that (i) the PPP Contractor is fined under the PPP Agreement and such penalty is not paid in due time; (ii) the PPP Contractor fails to compensate the Contracting Entity for liquidated damages related to the execution of the Project; (iii) the PPP Contractor fails to pay any charges or penalties owed to the Contracting Entity if the PPP Agreement is terminated prior to its maturity date; (iv) the PPP Contractor fails to pay any amounts which are determined by recommendation of a technical board or an arbitral award in favor of the Contracting Entity; or (v) the PPP Agreement is terminated by justified decision by the Contracting Entity.

8) Transmission companies

The Preliminary Tender Terms provide that in case TRANSENER S.A. or TRANSBA S.A. are awarded as PPP Contractor, as applicable, they will be not entitled to collect he supervision fee that the PPP Agreement establishes. Project’s supervision will be defined in a future tender process to be carried out by the SGE.

9) PPP Contractor’s payment scheme

TPIs will be issued by the PPP Trust during the Construction Period on a quarterly basis, pursuant to the actual works progress. Monthly investment advancement acts (“ARAI”) will be executed. TPIs shall be considered mature on the forty-two (42) month anniversary of the PPP Agreement’s execution date and will be payable on twenty-four (24) semi-annual payments.

With respect to the Residual Compensation, it shall be due and payable as from the Project’s COD monthly. Invoices for the corresponding Residual Compensation shall be issued by the PPP Contractor and delivered to the Contracting Entity. The PPP Trust will pay those invoices within fifteen (15) days.

  • Both TPIs and the Residual Compensation will be nominated in US dollars and shall be deemed as fixed, unconditional, irrevocable and transferable, without the Contracting Entity’s prior consent.
  • Non-timely TPIs will accrue interests to a rate equivalent to two-hundred (200) points above the performance of bonds ARG2026, ARG2027 and ARG2028N.
  • As TPIs are issued in accordance with the main works’ progress, the PPP Contractor will benefit itself with a speedy execution of the works under the Project.

10) Dispute resolution

  • Amicable negotiations: the PPP Agreement sets forth an initial stage of amicable negotiations in case there are any disputes between the parties. This initial stage has a period of thirty (30) days.
  • Technical board: once the thirty (30) day period of amicable negotiations expires, a technical board must intervene and issue a recommendation.
  • Arbitration:
    1. Requirements: if the technical board does not issue a recommendation in the term of ninety (90) days, any party may submit the dispute to arbitration.
    2. Venue: venue shall be in the City of Buenos Aires, unless: (i) the dispute is not quantifiable; (ii) the value under dispute exceeds the sum of ten-million US dollars (US$ 10,000,000); or (iii) the controlling shareholder is not Argentine. Upon any of those circumstance, the seat of arbitration may be in the City of Buenos Aires or in a member state of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958).
    3. Composition: the arbitral tribunal shall be composed of three (3) members when the dispute is not quantifiable or when the value under dispute is equal or higher to ten-million US dollars (US$ 10,000,000). If the value under dispute is less than ten-million US dollars (US$ 10,000,000), the arbitral tribunal shall be composed of one (1) member.
    4. Nationality: the president of the arbitral tribunal shall not be national to any of the parties nor to any controlling shareholder with a direct or indirect participation higher than 10% of the PPP Contractor.

11) Risk matrix

A preliminary risk matrix has been made available, whereby the Project’s risks are allocated either to the PPP Contractor or to the Contracting Entity, as the case may be. Such risk matrix indicates that the PPP Contractor shall bear, inter alia, (1) power-line easement-associated risk, pursuant to Law No. 19,552; (2) COD risk; (3) environmental risk. As for the Contracting Entity, it shall bear: (1) demand risk; and (3) exchange variation risk.


We are available to provide clarifications or further information of any matter addressed above.

*****

1. Currently, such bill as proposed by the National Executive is under review in the National Congress of the Republic of Argentina.↑
2. The Annual Fee is the PPP Agreement awarding variable and represents a sum equal to the twelfth part of the Required Total Amount.↑

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“Presto Hoy II” Financial Trust for AR$ 190,477,186

Deal counsel in the constitution of the issuance and placement in Argentina of trust securities for AR $ 190,477,186 issued under the “Presto Hoy II” Financial Trust, in which Wenance S.A acted as trustor and servicer, AdCap Securities Argentina S.A. as arranger, structuring agent, financial advisor and placement agent, and TMF Trust Company (Argentina) S.A acted as trustee.

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Simplification of requirements for foreign companies

On August 28, 2018, the Public Registry of Commerce of the City of Buenos Aires (Inspección General de Justicia) issued General Resolution N°6/2018, which amends and includes relevant changes for the registration of, and procedures to be carried out by, foreign companies under Articles 118 and 123 of General Corporations Act N° 19,550 (the “GCA”), in order to continue with the adaption of the Public Sector to the so-called “Good Practices in matters of Simplification”.

In this regard, the main modifications are as follows:

• It will no longer be necessary to submit documentation from the foreign company regarding its shareholding structure nor to inform details of its assets located abroad in order to comply with the registration procedure provided for in Article 118, third paragraph of the GCA.

• A foreign company’s obligation to submit Annual Information was repealed.

• Regulations on isolated acts were repealed.

• Representation of foreign companies will no longer be limited to the legal representative appointed in Argentina, but may be extended to officers appointed directly by the head office.

• For those companies from countries considered high-risk and non-cooperative, according to the criteria of fiscal transparency and/or categorized as non-collaborators in the fight against Money Laundering and Financing of Terrorism, the obligations set forth in Article 217 of General Resolution N° 7/2015 to file annual information remain in effect.

General Resolution N° 6/2018 shall be enforceable as from August 30, 2018, both for new procedures to be filed, as well as for those already in progress.

Please do not hesitate to contact Juan Pablo Bove, Federico Otero, Julián Razumny, or corporate@trsym.com for any further information.

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“Credimas Serie 33” Financial Trust for AR$ 196,350,000 million

Deal counsel in the issuance and placement in Argentina of trust securities for AR$ 196,350,000 issued under the “Credimas Serie 33” Financial Trust, in which Banco Supervielle S.A. acted as arranger and lead placement agent, Banco Mariva S.A. and Macro Securities S.A.as joint placement agent, TMF Trust Company (Argentina) S.A. acted as financial trustee and Credimas S.A. acted as trustor and servicing and custody agent. (2018)

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“CARFACIL III” Financial Trust for AR$ 67,452,350

Deal counsel in the issuance and placement in Argentina of trust securities for AR $ 67,452,350 issued under the “CARFACIL III” Financial Trust, in which TMF Trust Company (Argentina) S.A. as the trustee of the Financial Trust “FINANCIAL TRUST CARFAUTO” acted as trustor, Banco de Valores S.A. acted as trustee, organizer and replacement servicer and Ralf S.A. acted as credit administrator and payment agent.

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Julián Razumny joins TRS&M as partner of the Mergers and Acquisitions and General Corporate Department

Tavarone, Rovelli, Salim & Miani continues with the expansion and growth of its Mergers and Acquisitions and General Corporate Department through the addition of Julián Razumny as partner. The firm reaffirms its commitment to expand and once again invests in what has been its main distinctive feature: a young and talented team of lawyers led by partners highly committed to both clients and their team.

Julián specializes in corporate and financial law, areas in which he has more than 12 years of experience. He has a J.D. degree from the School of Law of the University of Buenos Aires and holds a post-graduate course in economy and finance for lawyers from the Pompeu Fabra University of Barcelona.

Prior to joining Tavarone, Rovelli, Salim & Miani, Julián excelled in renowned Argentine firms, advising in general corporate matters, M&A, debt restructuring processes with both local and foreign creditors, strategic negotiations and complex contracts negotiation and drafting. During the latest years, he has served as Corporate Legal Manager in Celulosa Argentina S.A., as well as advisor to its Board of Directors.

He has also attended and organized numerous seminars, conferences, workshops and congresses in Argentina and has been distinguished in 2017 by Legal 500 in their “GC Powerlist: Argentina” as one of the most influential in-house corporate lawyers.

In joining Tavarone, Rovelli, Salim & Miani, Julián will contribute, together with partners Juan Pablo Bove and Federico Otero, to the development and expansion of its M&A and Corporate team, area in which the firm has experienced a remarkable growth, increasing its participation in M&A deals, as well as expanding even more the client base to which the firm renders legal advice.

Tavarone, Rovelli, Salim & Miani is proud to have Julián among its members, who will strengthen the firm and will contribute to maintain it as one of the most active in our legal market.

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Secured loan for an aggregate amount of up to US$ 150,000,000 granted by the International Finance Corporation to the Province of Córdoba

Tavarone, Rovelli, Salim & Miani assisted on the structuring of a cross-border secured loan for an aggregate amount of up to US$ 150,000,000 granted by the International Finance Corporation (“IFC”) to the Province of Córdoba to finance capital expenditures in connection with the Borrower’s transport sector investment plan. The loan is secured by a trust agreement entered into by the Province as trustor, Banco Comafi S.A. as trustee and IFC as beneficiary.

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Public-Private Partnership Agreements. Indicative terms – Power transmission works

The Secretariat of Public-Private Partnership (the “SPPP”) has just outlined the tender terms for the first-high voltage power transmission lines (the “Executive Summary” and the “Project”, respectively), under the new public-private partnership scheme (“PPP”).

The Project comprises the construction and further operation and maintenance of: (1) the 500 kV high voltage line, between ET Río Diamante and the future ET Coronel Charlone; and (2) the future ET Coronel Charlone, along with the 132 kV connections in Laboulaye, Rufino, General Villegas, General Pico Sur and Realicó, and complementary works (hereinafter, referred as the “Main Works”).

The non-binding Executive Summary also foresees the provision of the O&M Services, during the O&M Period (as both terms are defined below).

The Project is designed under the PPP scheme, pursuant to Law No. 27.328 and its regulatory Decree No. 118/2017, which provides an alternative contracting structure to the Public Works and Public Works Concession frameworks (ruled by Laws No. 13,064 and 17,520, respectively).

The awarded bidders will execute a PPP Agreement (the “PPP Agreement”), with the Secretariat of Energy Politics Coordination, currently under the Federal Ministry of Energy (the “Contracting Entity” and the “ME”, respectively), for the execution of the Main Works and the performance of the O&M Services (as defined below).

Transmission projects must be up and running within thirty-three (33) months from the signing of the PPP Agreement (the “Construction Period”), while O&M Services will be provided for up to 15 years (the “O&M Period”) as from commercial operation date.

Please find below a summary of the most relevant aspects of the Project, as per indicated in the non-binding Executive Summary.

Main Works and O&M Services comprised by the Project

As indicated before, the Project involves the expansion of the current high-voltage transmission grid, by means of the execution of the Main Works -which shall be executed within the Construction Period-. The Construction Period is capped at a maximum of thirty-three (33) months from the execution of the PPP Agreement.

Following the Construction Period, the PPP Contractor shall provide the O&M Services within the O&M Period –capped at maximum fifteen (15) years-, comprised by the provision of O&M Services of the Main Works, pursuant to the terms and conditions set forth in the PPP Agreement, electricity regulatory framework, The Procedures and applicable regulations.

Applicable regulatory framework

The PPP Agreement will be governed and construed by (1) Law No. 27,328 and its regulatory Decree No. 118/2017, (2) Law No. 27,431, which approved the national budget for the current 2018 year, and (3) specific regulations of the electricity regulatory framework, such as (a) Laws No. 15,336 and 24,065; (b) their respective regulatory decrees (i.e Decrees No. 1398/1992 and 186/1995), and (c) “The Procedures”, which is a compilation of many resolutions that rule the electric market’s operation (comprised by Resolution No. 61/1992 of the former Secretariat of Electric Energy, as further complemented and amended).

The obligatory and direct application of specific electricity regulations, turns out to be innovative, in comparison with similar projects under the same PPP scheme.

Project’s structure

The PPP Contractor shall (1) execute the Main Works, within the Construction Period, and (2) provide the O&M Services, within the O&M Period. Repayment of investments incurred both during construction –CAPEX- and operation (OPEX) of the Project will be split and subject to different provisions, in order to mitigate the typical risks to which the PPP Contractor is exposed during those stages.

PPP Contractor’s payment

Main Works Payment

When placing its bid, the PPP Contractor will have to choose within two different payment arrangements concerning the Main Works’ execution, whether by (1) Investment Payment Titles Fee and Remaining Compensation, or (2) by a Monthly Compensation.

Such structure is new and differs from those previously adopted for other Argentine PPP Projects, whereas the repayment of PPP Contractor’s CAPEX was linked to long term recoverable TPIs (for its Spanish acronym: Título de Pago por Inversión) or TPDs (for its Spanish acronym, Título de Pago por Disponibilidad) exclusively.

TPI Compensation and residual Compensation

Under the first option, the PPP Contractor will receive a part of the TPIs total amount –which will not exceed the maximum of 80%- as from the fourth (4) year of the PPP Agreement’s term, through TPIs, nominated in US dollars, unconditional and irrevocable, according to the actual Main Works’ progress. These TPIs are linked to the Construction Period phase only.

The remaining 20% of the required total amount will be due and payable as from the Project’s commercial operation date –after the end of the Construction Period-, on a monthly basis, and within the O&M Period, through the residual Compensation (the “Residual Compensation”).

Under this structure:

  • The bidder shall indicate the TPI required percentage –equal or lower than 80% of the required total amount-.
  • Each TPI –that, as mentioned, will be nominated in US Dollars and fixed, unconditional, irrevocable and transferable- will involve thirty (30) biannual payments in US Dollars, being TPI’s first payment date at the thirty-ninth (39) month as from the date on which the PPP Agreement is executed. Non-timely TPIs (either by delays on its issuance or in its payment) will accrue interests.
  • TPIs will be issued by the Electric Transmission Individual Trust (please, see below), by instruction of the Contracting Entity, which shall also be responsible for TPIs payment.
  • In connection with the Residual Compensation, it will also be due under the same terms of the Monthly Compensation (See below).

Payment under Monthly Compensation scheme

Under the second option, the PPP Contractor will receive the total required amount through a monthly compensation (the “Monthly Compensation”), as from the Main Works’ commercial operation date and during the O&M Period.

Such Monthly Compensation will be invoiced by the PPP Contractor to the Contracting Entity, and will be payable by the Electric Transmission Individual Trust in one hundred and eighty (180) US Dollars equal and monthly installments.

Electric Transmission PPP Individual Trust

The Parties to the PPP Trust (the “Electric Transmission PPP Individual Trust”), will be (i) the Republic of Argentina, through the ME, as trustor; (ii) the Governmental Bank for Investment and Foreign Trade (in Spanish: Banco de Inversión y Comercio Exterior S.A., hereinafter, the “BICE”, for its Spanish acronym), as trustee; (iii) Banco de Valores S.A., as administrative agent of the trust; and (iii) PPP Contractor, as beneficiary.

The Electric Transmission PPP Individual Trust will operate as a single trust for the Project, for the administration of the allocated funds to the Project, and will be the obligor in respect to all payments due and payable to the PPP Contractor.

The Electric Transmission PPP Individual Trust will be funded by (1) contributions made by the Wholesale Electric Market Management Company (In Spansh: Compañía Administradora del Mercado Mayorista Eléctrico S.A, hereinafter “CAMMESA” for its Spanish Acronym), by means of Resolution of the former Secretariat of Electric Energy No. 1085/2017- and, (2) contingent contributions of the Federal State. The trust’s reserve account must be funded, at all times, in an amount equal or greater than the yearly PPP Contractor’s required amount. Such eventual contribution will be included in every year’s national budget law.

Bidding process and bidder’s selection

The selection process will be implemented through a national and international tender process, of multiple stages, on which bidders shall: (1) make their technical bid and comply with all the requirements set forth in the bidding terms and conditions (i.e. having experience on constructing high voltage lines in Argentina and abroad); and (2) indicate its selected payment option, as well as the required amount for the Main Works and O&M Services.

The awardee shall be the bidder which indicates the lower total required amount.

Incumbent transmission companies are entitled to place bids within the bidding process, as part of their non-regulated activity.

Required guarantees

The following guarantees are mandatory and therefore required by the Executive Summary (1) a bid bond (the “Bid Bond”), (2) the financial close bond (the “Financial Close Bond”, further to the PPP Agreement’s execution), and (3) the Main Works Bond (the “Main Works Bond”, further to the PP Agreement’s execution), which all of them shall be payable on demand by the issuer.

The term for the Financial Close Bond will be of six (6) months, extendable at the PPP Contractor’s request for additional two consecutive periods of three (3) months each, financial close is achieved. Financial Close shall occur no later than twelve (12) months as from the date on which the PPP Agreement is executed.

It is not required to provide an O&M guarantee during the O&M Period.

PPP Contractor’s constitution - SPV

Before the PPP Agreement is executed, the awarded bidder shall establish a sole purpose vehicle, in the form of a corporation (Sociedad Anónima), which will act as PPP independent transmission company, under the terms of Annex 16 of The Procedures.

Other relevant matters:

  • Risks related to the execution of the Project will be allocated pursuant to a risk matrix, to be agreed by both parties.
  • The early termination of the PPP Agreement for any reason will in no event affect the repayment of unamortized investments incurred by the PPP Contractor.
  • PPP Contractor will be in charge of obtaining all necessary permits and constituting the required power line easements, pursuant to Law No. 19,552.
  • The PPP Agreement will provide for an initial stage for dispute resolution in relation for matters of a technical or financial nature, or related to the interpretation of the PPP Contract, by a dispute board. The PPP Agreement will also establish a further stage of arbitration, whether locally or abroad, which foreign venue may be set forth in accordance with the PPP Contractor’s controlling parties.

At TRS&M, we are following these matters with great interest and are available to discuss any query regarding the above.

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