Milbank Represents the Inter-American Development Bank in US$200 Million Guarantee for Brazilian Power Company Energisa S.A.
Closing Marks Completion of Trailblazing Transaction for Partial Credit Guarantee Program
WASHINGTON, DC, June 4, 2007 – In a significant expansion of its partial credit guarantee program, the Inter-American Development Bank (IDB) issued a $200 million guarantee for a local-currency bank financing to Brazilian power company Energisa S.A.. The international law firm Milbank, Tweed, Hadley & McCloy LLP, represented the IDB in the transaction.
Milbank partner Glenn S. Gerstell, who led the firm’s team for the IDB, said “This was in many ways a trailblazing transaction for the IDB. They have long had a partial credit guarantee program, but until now the IDB had not expanded it to allow reimbursement in local currency – which of course makes it more attractive to Latin American companies. These deals always present challenges involving the varying requirements of lender, borrower and guarantor, compounded by the dual-currency nature of the transaction. Nevertheless the parties were able to develop a structure that will allow Energisa to free up funds to improve its electricity network and quality of service and coverage, while also creating an excellent template for future investment in Latin America by the IDB and other development institutions.”
In addition to Mr. Gerstell, the Milbank team representing the IDB included associates Steven Chung and Gavin McKeon, all in the firm’s Washington DC office.
About the Transaction:
The guarantee issuance involved a 10-year partial credit guarantee for the Brazilian reais equivalent of US$ 200 million under the IDB’s partial credit guarantee program. Energisa borrowed funds from a Brazilian bank, with a three-year grace period for principal repayments, and the funds were used as part of its overall $780 million restructuring. The IDB was represented as to US law by Milbank, which negotiated and drafted the key financing documents, and as to Brazilian law by Mundie e Advogados. Energisa was represented by Clifford Chance LLP as to US law and by Souza, Cescon Avedissian, Barrieu e Flesch as to Brazilian law.
About the IDB
A long-standing initiative of the Latin American countries, the Inter-American Development Bank was established in 1959 as a development institution with novel mandates and tools. The IDB is the main source of multilateral financing for economic, social and institutional development projects and trade and regional integration programs in Latin America and the Caribbean. It is the oldest and largest regional development bank.
About Energisa
Energisa S.A. is a holding company that directly controls all the companies that belong to the Cataguazes-Leopoldina Group, including five electricity distribution companies, two generation companies and three service companies, which serve over 1.9 million customers in the Brazilian states of Minas Gerais, Rio de Janeiro, Sergipe and Paraíba, in 355 municipalities covering approximately 91,180 square kilometers. Energisa has recently finalized its corporate restructuring as required by Brazil’s New Electricity Sector Law, which requires electricity providers to restructure their operations by creating independent generation and distribution entities.
About Milbank
Active in Latin America for many years, Milbank, Tweed, Hadley & McCloy LLP has played a prominent role in some of the region’s most innovative and complex transactions, from project financings and restructurings to securities offerings and IPOs.
Milbank is a preeminent global law firm that for more than 140 years has provided innovative legal solutions in many of the world’s largest, most complex, “first-ever” corporate transactions and litigation. Our transactional expertise includes capital markets, corporate finance and transactions, project finance, acquisition finance, and other major fields of law practice. Milbank litigation teams resolve disputes involving mergers and acquisitions, proxy battles, financings and securities offerings, intellectual property, white collar crime, and corporate restructurings, among others. Our clients range from prominent multinational financial, industrial and commercial enterprises to governments, institutions and individuals. The Firm is headquartered in New York with offices in Beijing, Frankfurt, Hong Kong, London, Los Angeles, Munich, Singapore, Tokyo, and Washington, DC.