Shortly before the project financing was closed, Colombian regulations were
changed, to prohibit the repayment of more than 40 per cent of a loan amount during the
first three years that the loan is outstanding. Under the new regulations a borrower that
pays more than 40 per cent is required to make a non-interest-bearing deposit with the cen-
tral bank. To accommodate repayments of more than 40 per cent the lending banks creat-
ed the Available Pledged Funds Account, a deposit account held by the US collateral
agent. Loan repayments above the 40 per cent limit are held in the Available Pledged
Funds Account until they can be repaid without a required central bank deposit. Deposits
in this account are protected from claims by 144A note holders or any other senior secured
parties. They continue to accrue interest at the applicable borrowing rate, even though
they are cash-collateralised. For subsequent working capital needs, funds are drawn first
from the Available Pledged Funds Account, to the extent available, and then new loans are
extended under the working capital facility. Recent changes in Colombian law required
this structure to be amended.
Debt service reserve letter of credit facility
In previous Colombian power projects, such as Termobarranquilla, state guarantees or under-
takings were necessary. The bank letter of
credit facility provided a credit enhancement
partly to replace the government guarantee or
power-purchase commitment common in
previous power project financings.
The US$13.2 million debt service letter
of credit facility, equal to six months principal
and interest payments, supports temporary
shortfalls in debt service payments to the
144A note holders. Drawings are available at
whichever is the earlier date among the com-
mercial operation date, the guaranteed com-
pletion date under the EPC contract or a ‘date
certain’ – defined as 34 months plus allowable
force majeuredelays. Principal payments are
subordinated to the other senior loans. The
debt service reserve lenders have a right to
‘step up’ or upgrade their principal repayment
status to be pari passuwith all senior secured
indebtedness if loans under the facility are not
paid on time or if the project debt is accelerat-
ed. Fees and interest on the facility rank pari
passuand share collateral with senior debt.
Sources and uses of funds in connection
with development, construction, financing,
and commencement of commercial operation
of the project were estimated, and are shown
in Exhibit 3.5.
POWER PLANT
Exhibit 3.5
Sources and uses of fundsSources (US$ million)
Sponsor equity 44.8
144A note issue 165.0
Total sources of funds 209.8
Uses (US$ million)
EPC price (net) 123.3
Interconnection/meter 0.8
Land purchase 2.0
Development budget 15.0
Legal fees during development 7.6
Financing and legal fees 5.7
Quorum engineering fees 1.4
Owner’s construction administration 2.5
Independent engineering during construction 0.2
Startup costs 5.6
Insurance during construction 2.9
Taxes and duties during construction 6.8
Environmental management 0.2
Interest during construction (net) 25.0
Contingency 10.0
Pre NTP 0.8
Total uses of funds 209.8
Source:Prospectus for project bonds.