Morales & Besa advised CRC Transmisión in the financing of electrical transmission projects

December 17, 2019

Morales & Besa successfully advised CRC Transmisión SpA in the financing for the construction and operation of a portfolio of electric transmission projects awarded by the Ministry of Energy. It includes more than 550 kilometers of transmission lines and eight substations, owned by Diego de Almagro Transmisora de Energía S.A., Casablanca Transmisora de Energía S.A., and Mataquito Transmisora de Energía S.A., located in Chile, in the regions of Atacama, Valparaíso and Biobío. It is expected to benefit 17.6% of the national population.

The financing was granted through a private placement under section 4(a)(2) of the Securities Act of the United States of America, fully subscribed by Allianz Global Investors, and through a VAT facility granted by Banco Santander- under Chilean law.

It is worth mentioning that it is the first of its kind in construction-risk, single asset manager private placement transaction for the transmission lines sector in Latam.

Other relevant aspects are delay-draws of the Notes for 3.5 years, a 30-year private placement, interest-only for more than 10 years, and equity funding back-ended (after debt has been injected) and backstopped by Equity LCs. Also, a significant structural flexibility to allow for the refinancing of one asset today while allowing the construction of the two larger assets on the next four years, in addition to allowing the Issuer to raise additional debt for mandatory capex that can be required by the regulator. Finally, an investment grade rating obtained on the Notes, despite the construction risk and the Notes maturing beyond the end of the fixed tariff regime period of 20 years.

The Morales & Besa’s team that participated in this operation was led by partner Myriam Barahona, along with senior associate Ignacio Menchaca, and associates Bernardo Mora, Ignacio Chomalí and María Victoria Alonso.