United States: Milbank Advises Pacífico Tres To Help Fund 4G Highway Improvement Project In Colombia
Last Updated: March 2 2016

NEW YORK, February 26, 2016 – In a noteworthy capital markets transaction tied to a large public infrastructure project in Latin America, Milbank, Tweed, Hadley & McCloy LLP has advised Colombian Concessionaire Concesión Pacífico Tres S.A.S. and its sponsors, MHC Ingeniería y Construcción de Obras Civiles and Construcciones El Cóndor, and Costa Rica's infrastructure company Constructora MECO in connection with the structuring of a dual-currency project bond and financing package consisting of two tranches of bonds used to fund an extensive toll road improvement plan in Colombia. The offering is the first debt financing of its kind tied to a toll-road concession infrastructure plan of the Colombian National Infrastructure Agency.

Pacífico Tres is the entity created in 2014 as part of a 25-year concession with Colombia's Ministry of Transportation to rehabilitate and operate an extensive series of highways linking three of the country's most commercially important regions – Valle del Caucua, Antioquia and Eje Cafetero – with the key port of Buenaventura on Colombia's Pacific coast.  The concession operator is Conexion Pacifico 3, jointly owned by three of Colombia's leading construction companies.

In the first part of the offering, Pacífico Tres issued a tranche of $260.4 million of Series A notes due 2035, yielding 8.250%.  In the second portion, the company issued COP$397 billion of Series B UVR-indexed notes due 2035, yielding 7.000%.  Both transactions closed on February 22.

Proceeds of the transaction will go toward financing key aspects of the project, including improvement of existing roads, construction of new short road stretches, as well the construction of two large tunnels and several bridges. The improvements are expected to be completed over the next five years.

The complete financing package includes three separate loan tranches along with a liquidity facility provided by Financiera de Desarrolo Nacional (FDN), a Colombian state-owned economic development bank.

Milbank's deal team was led by Global Securities partner Carlos Albarracín along with Project Finance partner Carolina Walther-Meade, both also members of the firm's leading Latin American practice. The team also included partners Andrew Walker (Tax), Joel Krasnow (ERISA), as well as Alternative Investments special counsel Catherine Leef Martin, Global Securities associates Donald Canavaggio and Alex Barlow; Project Finance associates Richard Hillman, Jaime Ramírez and Andrés Arnaldos Montaner and international associates Anacandy Perusquia and Maria Camila Quintero.

"We are excited to have worked on this offering tied to such an important and ground-breaking highway improvement program in Colombia," said Mr. Albarracín. "It's not often that capital markets transactions can be used to support major greenfield infrastructure projects and we hope this deal can serve as something of a model for future project financings in the Americas."

Ms. Walther-Meade added, "It's great that Milbank could play a key role in such a high-profile public private partnership financing that will accelerate much-needed improvements to one of Colombia's central highway systems.  The transaction spotlights the firm's combined expertise in project finance and capital markets in Latin America's transportation and infrastructure sectors, and our longtime experience in Colombia."

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