Winner: Ergon Peru
Design and installation of small-scale photovoltaic systems in world’s largest rural electrification project
SPONSOR: Tozzi Green (90%) and Gardini 2002 S.R.L (10%)
LOCATION: north-central and southern regions of Peru
FINANCING TYPE AND SIZE: $222 million senior secured notes due 2034. Private placement for refinancing of project.
BANKS: SMBC; Scotiabank Peru
LAW FIRMS: Estudio Echecopar (member firm for Baker McKenzie); Baker McKenzie; Garrigues; Paul Hastings
SUPPORT: Hatch Ltd. (environmental and social consultant); Marsh (insurance consultant); Arthur J. Gallagher & Co. (insurance broker)Dividing Rule
One deal that stood out in the 2020 awards period for its direct impact on the general public was the $222 million refinancing notes sold by Italy’s Tozzi Green to support its rural electrification project in Peru, the largest in the world.
This deal, which expanded the introduction of small-scale photovoltaic systems, will provide 215,000 families power for their homes in remote areas of north-central and southern Peru.
The issuance of the 15-year 4.87% certified green bond was oversubscribed by four times and done as a private placement. It earned an E1 green evaluation score, the highest available. It will refinance a project finance loan from 2018 as well as help build out the final phases of the project, paying transaction related costs as well as funding reserve accounts.
In 2015, Ergon Peru was awarded a 15-year investment contract to install, operate and maintain 172,890 systems in off-grid areas by Peru’s Ministry of Energy and Mines. The expansion to 215,000 families help the government meet its goal of expanding electrification across the country using clean energy sources.
“When it was successful, we had our guys 4000 meters above sea level looking at it and they came back shocked. They really felt they were changing the lives of people because if they didn’t get this equipment they would never have electricity. There never would have been an electric line,” Luis Fernando Perdigón, SMBC’s new head of Latin America told LatinFinance, when describing the impact of the transaction.
The project is the first of its kind in Peru and represented some legal challenges “due to the interpretation and application of new legislation (and also because of the lack of certain regulations required for the project to be bankable), and the negotiation of an amendment to the three investment agreements signed by Ergon with the Ministry of Energy and Mines for bankability purposes,” Estudio Echopar said in its nomination letter.
After the 15-year period is up, the expectation is for the project to be taken over by a group of local electricity distributors.
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