Clifford Chance LLP through its São Paulo and Washington, DC offices, and Machado, Meyer, Sendacz e Opice Advogados in Brazil have acted for a group of development banks in agreeing financing of US$940 million for the construction of part of the São Paulo ring road.
Mayer Brown LLP, also operating from São Paulo, and TozziniFreire Advogados acting as Brazilian counsel represented Companhia de Concessoes Rodoviarias (CCR), which holds the concession to build a stretch of the road, in the deal which closed on 3 December.
The Inter-American Development Bank (IADB) and Japan Bank for International Cooperation (JBIC) are among the lenders.
TozziniFreire partner Antonio Felix says, “One interesting feature of the transaction was the collaboration between IADB and JBIC, based on a memorandum of understanding the two institutions signed in March 2009 that was aimed at dealing with the effects of the world financial crisis.”
The IADB will provide a 15-year US$100 million loan, with JBIC making a 15-year US$200 million loan.
The financing, set to be disbursed on 22 December, will also include a 13-year, US$200 million B loan from Caixa Geral de Depósitos, Banco Espírito Santo and Calyon, while Banco Bradesco will also extend 750 million reais (US$440 million) in subordinated unsecured debt.
Mayer Brown partner James Vickers says, “The structure permits the concessionaire to refinance the subordinated debt tranche with additional senior debt, subject to the satisfaction of some conditions. This flexibility was necessary given the difficulty in determining the likely increase over time of the traffic flow for the road – this can only be determined with any certainty following the commencement of the south portion of the road.”
Machado Meyer’s Adriano Ferreira says that as well as the debt replacement feature of the transaction, “its complex capital structure and security package made it unique.” He adds that the IDB is a traditional client of the firm.
The same applies to Clifford Chance, which is one of the bank's panel firms, and had also represented JBIC and the other lenders in Latin American transactions in the past.
Clifford Chance partner Chris McIsaac says Machado Meyer and Tozzini designed the collateral structure with very little input from the international firms. “Machado Meyer was also very helpful in assisting JBIC with its evaluation of Brazilian sectoral, regulatory and country risk, in what was JBIC's first limited recourse toll road deal and first deal with CCR,” he adds.
CCR won a concession to build a 32-kilometre stretch of road in 2008, holding a 95 per cent share in the concession company, with Encalso Construções holding five per cent. The road will form the western section of the 182-kilometer São Paulo beltway project, which will eventually surround the city.
Overall the cost of the west road is expected to be US$1.5 billion.
The west part of the highway marks the first stage of road building under São Paulo’s programme of second generation state toll road concessions, and lawyers working on the deal say it is Brazil’s largest ever infrastructure project.
Counsel to Companhia de Concessoes Rodoviarias and Encalso Construções
· In-house counsel - Tatiana Sperandeo
International
· Mayer Brown LLP
Partners James E C Vickers and Stephen Hood, and associate Philip Searson
Brazil
· TozziniFreire Advogados
Partners Antonio Felix and Claudia Bonelli, and associates Mateus Gianeti, Paulo Leme and Carolina Caiado
Counsel to the banks
· In-house counsel to IDB - Paloma Lima
International
· Clifford Chance LLP
Partner Chris McIsaac and associates Yana Kravtsova and Audrey Yiadom in Washington DC and associate Patrick Jackson in São Paulo
Brazil
· Machado, Meyer, Sendacz e Opice Advogados
Partners José Ribeiro do Prado Júnior and Eduardo Castro and associates Adriano Schnur, Bruno Racy, Paulo Rodrigo Markossian and Gustavo Silveira
DT
(Latin Lawyer 07.12.2009)
(Notícia na íntegra)
