Garrigues acts on $975m loan for Chancay Multipurpose Port

Garrigues Peru has advised the lenders and agents on a 15-year US$975 million loan signed on 28 March 2023, for COSCO SHIPPING Ports Chancay Peru (CSP Chancay).

The purpose of the loan is to use the funds for the construction and development of the Chancay Multipurpose Port Terminal, located 67 km north of Lima, Peru.

The project will be financed by a syndicate of lenders led by Bank of China, as Joint Mandated Lead Arranger and Bookrunner, and includes Bank of Communications Co, China Minsheng Banking Corp. Shanghai Pilot Free Trade Zone Branch, and Shanghai Rural Commercial Bank.

This project is the first private port for public use in Peru. It is also one of Peru’s largest project finance transactions in a decade and is believed to be the largest port financing in the country’s history.

The financing has been highly complex, with negotiations lasting more than 3 years between parties located in China, Hong Kong and Peru. The deal includes a highly tailored security package, covering shares in CSP Chancay, a pledge of all assets, a pledge of accounts, a mortgage on the land and concession, and direct agreements with the project contractors.

Diego Harman, lead partner on the transaction, added: “It has been a pleasure working with COSCO and Volcan on this historic project, which is truly exciting for Peru as it is the country’s first privately-owned port for public use. Its strategic location in the central-northern region of the country will help boost economic development as it will allow for a direct shipping lane between Asia and South America. The transaction was able to be signed successfully after more than 3 years in the making, which highlights the significant economic importance of the Project, not only for the country but also for the Asia-South Pacific region.”

The Project has been under development since 2008. The Port of Chancay is a natural deep water port, which will allow the handling of containerised cargo, general cargo, non-mineral bulk cargo, liquid cargo and roll-on/roll-off cargo, through an operational port area, a gateway complex and an underground viaduct tunnel. It is set to become the main regional port in the South Pacific.

CSP Chancay is 60% owned by COSCO SHIPPING Ports, a Hong Kong listed company, and 40% by Volcan Compañía Minera, a Peruvian listed company.

Other firms involved in the transaction were Mayer Brown as international counsel to the lenders, Appleby as Bermuda and BVI counsel to the lenders, Rebaza Alcázar & De Las Casas as counsel of Volcan, Holman Fenwick Willan as international counsel to CSP Chancay, and Payet Rey Cauvi Pérez Abogados as Peruvian counsel to CSP Chancay.

Rebaza Alcázar & De Las Casas team included partners Alberto Rebaza, and Luis Miguel Elías, and associates Rafael Santin and Josefina Arana.

Garrigues’ team was led by partner Diego Harman (pictured), with support from associates María José Cardoza and Eduardo Ortega.