MSU Energy S.A.´s Series I & II Notes Offering
Counsel to MSU Energy S.A. in the issuance of its US$ 12,631,473 Series I Notes and UVAs 20,901,579 Series II Notes, under its US$ 100,000,000 Global Notes Program.
Amendments to Resolution No. 285/2018 of the former Ministry of Energy and Mining: COD Extension and reduction of penalties for RenovAr projects
On August 3rd, 2021, the Secretary of Energy issued Resolution No. 742/2021 (“Resolution 742”), which partially amended Resolution No. 285/2018 of the former Ministry of Energy and Mining (“Resolution 285”).
1. Main outlines of Resolution 285
Resolution 285, now modified by Resolution 742, allowed generators under RenovAr 1, 1.5 and 2 to defer Commercial Operation Date (“COD”) under their Power Purchase Agreement (“PPA”) for up to 180 days.
In addition, Resolution 285 also allowed generators to pay penalties for late COD in 12 or 48 monthly installments.
2. Context in which Resolutions 285 and 742 are enacted
Resolution 742 continues the path lay out by Resolution 285 as it is issued to allow the execution and operation of projects under RenovAr 1, 1.5, 2, 3, and Resolution No. 202/2016 of the former Ministry of Energy and Mining which have suffered delays in achieving COD.
Accordingly, Resolution 742 purported purpose is to enhance further investment in the renewable sector by providing certain relief to the projects comprised in said resolution.
Furthermore, both resolutions are issued under the scope of the Laws No. 26,191 and 27,191. Such laws aim to increase to twenty percent (20%) by 2025 the total domestic demand of renewable energy, by mandating that a portion of the country’s electricity consumption must be sourced from renewable energy.
3. Resolution 742 key takeaways
Key takeaways of Resolution 742 are:
- Option to extend the additional term provided by Resolution 285 to achieve COD in 360 days.
- Right to adhere to the terms of Resolution 285 (as amended by Resolution 742) at generator’s option.
- Reduction of penalties fines based on the progress of the project’s works or, in the case of projects that have already achieved COD, with a delay greater than 180 days, such reduction is of 70%.
- CAP to the penalties which may be offset from the PPA, amount which shall not exceed 40% of the monthly revenues.
Below is a comparison between the most significant aspects of Resolution 285 and Resolution 742.
Also, we detail certain maters introduced by the Resolution 742 which were not foreseen in Resolution 285.
Finally, we single out certain aspects of Resolution 742 which should be further clarified.
| Issue | Resolution 285 | Resolution 742 |
|---|---|---|
| Payment of penalties | Penalties payable in 12 or up to 48 equal, consecutive, monthly installments. In the latter, an annual interest rate of 1.7% is applied. | Penalties still can be paid in 12 or up to 48 equal, consecutive, monthly installments. However, in the latter, Resolution 742 caps the monthly penalty in an amount no greater than 40% of the monthly revenue under the PPA. The unpaid balance will be offset until the total is completed, under this methodology. The purpose of this clause is to ensure generation plants maintenance and to avoid a penalty deduction greater than the monthly remuneration. |
| Extension of COD | COD extension up to 180 days. | COD extension up to 360 days, if the following criteria is met: (i) evidences that the Project has been executed in a percentage equal or greater to seventy percent (70%) an increase of the Contract Performance Guarantee; or (ii) the compliance bond has been increased or is increased in 30%. |
| Additional changes | Resolution 285 provided that for the application of a daily penalty a rate of US$1,388/MW. Nonetheless, this fine could be reduced evidencing certain progress of the project. | Article 3 bis is incorporated, which establishes: (a) Projects that have achieved COD: Those that (x) reached COD, (y) with a delay of more than 180 days, and (z) that have not requested the application of Resolution 285, may postpone COD in 360 days. In this case, a reduction of penalties in 70% is foreseen. (b) Projects that have not reached COD: Those that (x) have not reached COD, (y) did not requested the application of Resolution 285, and (z) adhere to Resolution 742; must replace the compliance bond with a bank guarantee, payable upon demand, which shall also contemplate any prior increase which may be due. In this case, it is provided that, during the additional 360 days extension period of COD, the daily fine will be equivalent to the daily fine established in Clause 13.2. (a) or 13.1, accordingly. Such fine may be reduced based on the progress of the project. |
4. Other relevant matters
Generators adhering to Resolution 742 are required to waive any prior or future administrative, judicial, administrative, or arbitral claims against the National Government, the Secretary of Energy or CAMMESA in the Argentine Republic, whether in Argentina or abroad.
If adhering to Resolution 742, generators shall manifest so in writing to CAMMESA and submit such waiver within 30 business days.
5. Matters which should be further clarified
The following matters are singled out which, from our perspective, are not entirely clear and should be further clarified.
Resolution 742 does not state whether the eventual reduction of the penalties fines up to 70% is for the entire fine accrued, or for the balance not yet accrued or unpaid.
Resolution 742 does not indicate whether the replacement of the compliance bond for a bank guarantee is for the projects covered by article 3 bis, second paragraph solely (projects without COD, which have not yet adhered to Resolution 285) or for all projects comprehended by Resolution 742.
Finally, in relation to the compliance bond increase, required by articles 3 a) (ii) and 3 b) to admit the extension of the COD, is not specified whether such increase should be for the original guarantee or for the replaced guarantee (bank guarantee).
For further information, please contact either Nicolás Eliaschev, Javier Constanzó, or Daiana Perrone.
“RG Albanesi Serie XII” Financial Trust for U$S 22,000,000
Legal Advisors of the trustor Rafael G. Albanesi S.A. in the issuance and placement in Argentina of debt securities in the form of Class 1 Trust Securities for 23,255,068 UVA (Unidades de Valor Adquisitivo) and Class 2 Trust Securities for U$S 2,000,000, under the Financial Trusts Global Program “RG ALBANESI II” for an amount of up to U$S 100,000,000. TMF Trust Company (Argentina) S.A. acted as trustee, Banco de Servicios y Transacciones S.A. acted as arrenger and placement agent; SBS Capital S.A. acted as arranger; and SBS Trading S.A., Allaria Ledesma & Cía. S.A., BACS Banco de Crédito y Securitización S.A., Banco de la Provincia de Buenos Aires, Facimex Valores S.A., Macro Securities S.A., Liebre Capital S.A.U., Banco Supervielle S.A., Balanz Capital Valores S.A.U. and Banco Hipotecario S.A. acted as placement agents.
Legal Advice in the Issuance of PyME CNV Guaranteed Series I Notes of Héctor A. Bertone S.A. for AR$200,000,000
Counsel to Héctor A. Bertone S.A. in the issuance of PyME CNV Guaranteed Series I Notes for AR$200,000,000 with an interest rate of BADLAR plus a margin of 4% due July 28, 2023.
Banco Supervielle S.A., Banco de Servicios y Transacciones S.A., and Banco CMF S.A. acted as arranger, placement and security agents of Series I Notes.
Legal Advice in the Issuance of PyME CNV Guaranteed Class 1 Notes of Diransa S.R.L. for AR$100,000,000
Counsel to Banco Supervielle S.A. as arranger, placement and security agent in the issuance of Diransa S.R.L.’s PyME CNV Guaranteed Class I Notes for AR$100,000,000, due in June 29, 2023, and with a variable annual nominal interest rate equivalent to the BADLAR rate (payable on a quarterly basis).
Municipality of Cordoba’s Series XLII Treasury Notes Issuance for AR$749,576,000
Legal counsel to the Municipality of Cordoba’s, as issuer, Banco de la Provincia de Córdoba S.A., as arranger and placement agent, and to Banco de Servicios y Transacciones S.A., Puente Hnos. S.A., AdCap Securities Argentina S.A., Banco de la Ciudad de Buenos Aires, Banco Hipotecario S.A., SBS Trading S.A. and Nación Bursátil S.A., as placement agents, in the issuance of Municipality of Cordoba’s Series XLII Treasury Notes (the “Treasury Notes Series XLII”), under the Municipality of Cordoba’s Treasury Notes Issuance Programme. The transaction closed on June 29, 2021 and the payments due under the Treasury Notes Series XLII are secured by certain rights of the Municipality to collect certain contribution charges over the commercial, industrial and services activity. The Treasury Notes Series XLII were issued for AR$749,576,000 at an annual floating interest rate equivalent to Badlar plus 4.75%, due on March 25, 2022.
Legal Advice in the Issuance of Notes of CT Barragán S.A. for U$S27.335.576 in Series 1 and 37.504.954 UVAs in Series 2
Counsel to Banco De Galicia y Buenos Aires S.A.U., Banco Santander Río S.A., Industrial and Commercial Bank of China (Argentina) S.A., Invertir en Bolsa S.A., SBS Trading S.A., Balanz Capital Valores S.A.U., HSBC Bank Argentina S.A., AR Partners S.A., Banco de la Provincia de Buenos Aires, BACS Banco de Crédito y Securitización S.A., Banco de Servicios y Transacciones S.A., y Banco Hipotecario S.A. as placement agents in the issuance of CT Barragán S.A.’s 4% Series 1 Notes for US$ 27.335.576 due June 4, 2023 and of 4% Series 2 Notes for 37.504.954 UVAs (Unidades de Valor Adquisitivo) due June 4, 2024. The Notes have a personal guarantee, subject to a precedent and resolutory condition granted by YPF S.A. and Pampa Energía S.A.
Banco De Galicia y Buenos Aires S.A.U., Banco Santander Río S.A., Industrial and Commercial Bank of China (Argentina) S.A., Invertir en Bolsa S.A., SBS Trading S.A., Balanz Capital Valores S.A.U., HSBC Bank Argentina S.A., AR Partners S.A., Banco de la Provincia de Buenos Aires, BACS Banco de Crédito y Securitización S.A., Banco de Servicios y Transacciones S.A., and Banco Hipotecario S.A. acted as placement agents of Series 1 Notes and Series 2 Notes. Banco Santander Río S.A. acted as Settlement Agent for both classes of Notes.
Municipality of Río Cuarto’s Series XXXV Treasury Notes Issuance for AR$251,077,242
Legal counsel to the Municipality of Rio Cuarto, as issuer, Banco de la Provincia de Córdoba S.A. and Puente Hnos. S.A., as arrangers and placement agents in the issuance of Municipality of Río Cuarto’s Series XXXV Treasury Notes (the “Treasury Notes”), under the Municipality of Río Cuarto’s Treasury Notes Issuance Programme. The transaction closed on June 11, 2021 and the Treasury Notes are secured by the Municipality's credits for contributions levied on commercial, industrial and service companies' activities. The Treasury Notes were issued for AR$251,077,242 at an annual floating interest rate equivalent to Badlar plus 4%, due on November 23, 2021.
New Pricing Scheme for Legacy Power Generators, Co-generators and Self-generators: Amendment to Resolution 31/2020 of the Secretary of Energy
On May 21st, 2021, the Secretary of Energy issued the Resolution No. 440/2021 (“Resolution 440”), which most relevant aspects are singled out below:
- Resolution No. 31/2020 (“Resolution 31”) is abrogated by Resolution 440, including the remuneration adjustment mechanism set forth in said Resolution 31.
- A new pricing scheme applicable to the Wholesale Electricity Market Generator Agents of Tierra del Fuego’s (WEMGATDF) is contemplated.
- WEM Agents included in Resolution 440 are required to waive any prior or future administrative claim against the National Government, the Secretary of Energy or CAMMESA, regarding the implementation of the remuneration adjustment mechanism provided in Resolution 31.
- Finally, CAMMESA is instructed to re-settle any economic transaction starting on February, 2021, thereof.
The purported aim of Resolution 440 is to mitigate the effects of the economic situation as a result of the economic crisis and COVID-19 pandemic, as a way to ensure the sustainability of the WEM under economically reasonable and efficient conditions.
Below is a summary of Resolution 440 most relevant aspects:
1. Scope of Resolution 440
A new remuneration mechanism for conventional and renewable generation, cogeneration and self-generation, operating without a PPA, has been approved, effective as of February 1st, 2021.
2. Changes in the remuneration conditions of the Generating Agents
Resolution 440 provides for a new remuneration scheme for the WEMGATDF and WEM Agents, with increases in around 29% when compared to repealed Resolution 31, with effects starting on February 2021.
Unlike abrogated Resolution 31, Resolution 440 does not include a remuneration adjustment mechanism.
3. Waiver under Resolution 440
WEM Agents included in Resolution 440 which choose to benefit from Resolution 440 are required to waive any prior or future administrative claim against the National Government, the Secretary of Energy or CAMMESA, regarding the implementation of the remuneration adjustment mechanism provided in Resolution 31.
Such waiver shall be submitted no later than June 21st, 2021.
For those WEM Agents which chose not to submit such waiver, they shall continue receiving the remuneration set forth in Resolution 31 and forfeit they right to receive the retroactive amounts provided in Resolution 440.
If such waiver is submitted later than June 21st, 2021, they shall receive the new remuneration set forth in Resolution 440 but will not be entitled to receive said retroactive amounts.
For further information, please contact either Nicolás Eliaschev or Javier Constanzó.
Legal Advice in the Issuance of Notes of Molinos agro S.A. for US$53,854,643
Counsel to Molinos agro S.A. in the issuance of 1.5% Class I Notes for US$28,462,533 due May 18, 2023 and 2.5% Class II Notes for US$25,392,110 due May 18, 2024, both classes were issued under the Global Notes Program for an amount of up to US$150,000,000.
Banco Santander Río S.A., Banco De Galicia y Buenos Aires S.A.U. and Banco BBVA Argentina S.A. acted as arranger and placement agents of Class I and Class II Notes.