Guerrero Olivos advises IDB Invest on the purchase of FET payments

Guerrero Olivos has advised IDB Invest in the structuring of a financial facility that allowed the purchase of more than 99% of the payment documents issued by the Tariff Stabilisation Fund (FET) under Chile’s new MPC Law (Law No. 21.667).

Through purchase facilities provided to 26 power generation companies in Chile, IDB Invest committed to purchase the payment documents issued in favour of each of them for up to $2.4 billion.

The transaction is the largest mobilisation of private resources in IDB Invest’s history. The structure of this facility is divided into a Facility A of up to $240 million financed with IDB Invest’s own capital, and a Facility B of up to $2.16 billion financed through private offerings of debt securities under regulation 144A Reg S in the international capital markets.

The transaction, closed on 7 October, will put an end to the accumulation of debt by power generation companies and address their immediate liquidity and long-term financial sustainability.

It is the largest mobilisation of private resources in IDB Invest’s history and one of the most important capital market issues in Latin America. IDB Invest’s purchase of payment documents will primarily benefit consumers identified as vulnerable by ensuring a controlled transition to market prices for electricity services and providing financial sustainability to generation companies.

Other participating firms were Clifford Chance, A&O Shearman, Winston and Strawn, White & Case, Milbank, Nixon Peabody, Kunstmann Spiess Abogados, Claro & Cía, and Morales & Besa.

Guerrero Olivos’ team was led by partner Clemente Pérez (pictured), with support from partner Miguel Coddou, senior associates Sebastián Marambio and Roberto Burgos, and associate Joaquín Rojas.