November 22, 2016

Milbank Advises International Lenders in Financing for Natural Gas Pipeline in Central Mexico

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235-mile conduit connects western Mexico to existing pipelines in states of Aguascalientes and San Luis Potosí

In its latest major energy infrastructure financing transaction in Mexico, Milbank, Tweed, Hadley & McCloy LLP advised a group of international lenders backing construction of a natural gas pipeline that will connect the city of Guadalajara, in the western coastal state of Jalisco, to existing pipelines at reception points in the states of Aguascalientes and San Luis Potosí.

The transaction closed on November 22.

The new pipeline, developed by leading Mexico infrastructure builder and operator Fermaca, will run approximately 235 miles (378 km) in a generally east-west direction, with a carrying capacity of 886 million cubic feet per day. The project, called the Fermaca Villa de Reyes to Aguascalientes to Guadalajara Pipeline Project, includes a compressor station and other ancillary facilities.

The Milbank team, led by Global Project, Energy and Infrastructure Finance partner Dan Bartfeld and associates Michael Evry and Caylee Hong, advised joint lead arrangers ING, Nord/LB, Banco Santander, Banco Sabadell, Mizuho Bank, Natixis, Banca Intesa, KfW, and BNP Paribas, as well as The Korea Development Bank as co-manager.

“We’re delighted to once again work with leading global financial institutions on a major energy infrastructure project in Mexico that benefits the country’s search for energy alternatives and provides a market for US natural gas supplies,” said Mr. Bartfeld, who has led Milbank’s ongoing work on financings related to pipelines connecting the US and Mexico.

This project marks the third project financing in Mexico that Milbank has advised Fermaca’s lenders on over the past year, including construction on the 450 kilometer La Laguna to Aguascalientes Pipeline Project and the La Laguna Pipeline Project, stretching for 465 kilometers between El Encino in the state of Chihuahua and La Laguna in Durango in 2015. Recently, Milbank advised on the Nueva Era Pipeline Project, the first pipeline project with sections on both sides of the US and Mexico border, running approximately 200 miles from a hub in Webb County, which borders the Rio Grande River, into the northern Mexican state of Nuevo León. The firm also advised on the financing of the 120-mile Agua Dulce natural gas pipeline from Texas to Mexico, the 237-mile Tarahumara natural gas transmission pipeline in the Mexican state of Chihuahua, with an interconnection point at the US/Mexico border, and the 380-mile natural gas transmission pipeline between Samalayuca, Chihuahua and Sásabe, Sonora. Milbank currently has the lead legal role in several additional major pipeline transactions in the US and Mexico.