10.6 "Mirror" Loan Agreement with the state of Parana Relating to the
Paranasan Financing........................................................
EXHIBIT 10.6
DRAFT
SUB-LOAN AGREEMENT FOR FUNDS IN
ACCORDANCE WITH LOAN No. BZ-P13,
BETWEEN JBIC AND THE STATE OF
PARANA EXECUTED HEREWITH BY THE
STATE OF PARANA AND COMPANHIA DE
SANEAMENTO DO PARANA - SANEPAR.
By and between the STATE OF PARANA, an internal, public legal entity,
hereinafter the STATE or the BORROWER, represented herein by the Governor of the
State Xxxxx Xxxxxx; assisted by the Secretary of State for Planning, XXXXXX
XXXXXXX and by the Secretary of the Treasury, XXXX XXXXXXXX XXXXXX; and,
COMPANHIA DE SANEAMENTO DO PARANA - SANEPAR, a partially state-owned
corporation, Taxpayer Identification No. ________ located at Rua Engenheiros
Reboucas 1376, Bairro Reboucas, Curitiba, hereinafter SANEPAR, represented
herein pursuant to law and the bylaws of the corporation by its President and
Chief Executive Officer, XXXXXX XXXXXX XXXXXXXX XX XXXXXXX, and its Chief
Financial Officer, XXXXXXX DEL XXXXXX PERPATUO; and
CONSIDERING that the STATE executed with THE OVERSEAS ECONOMIC CORPORATION FUND
- OECF, JAPAN, formerly known as JAPAN BANK FOR INTERNATIONAL COOPERATION -
JBIC, a bilateral credit institution with its headquarters in Tokyo, Japan,
hereinafter JBIC or the FUND, a LOAN AGREEMENT, attached, in foreign currency,
under No. BZ-P13 and dated January 8, 1998, known as the LOAN AGREEMENT,
regulated by JBIC's General Conditions Applicable to Loan and Guarantee
Agreements, known as GENERAL TERMS AND CONDITIONS, also attached, for financing
of a portion of the Environmental Improvement Project of Parana, hereinafter
known as Project PARANASAN;
CONSIDERING THE ORIGINAL VALUE OF THE LOAN AGREEMENT: Up to the amount of
TWENTY THREE BILLION SIX HUNDRED EIGHTY-SIX MILLION JAPANESE YEN (JPY
23,686,000,000);
CONSIDERING that the above-mentioned external funds are earmarked for
improvement of the water supply system, sewage and management of agro-toxic
waste disposal in order to improve the social environment in the area of
Project PARANASAN, as defined in the LOAN AGREEMENT, to be developed and
implemented in accordance with the goals and objectives set forth in the LOAN
AGREEMENT;
CONSIDERING thus that SANEPAR hereby declares that it is familiar with and
expressly agrees with the terms of the LOAN AGREEMENT and with the GENERAL TERMS
AND CONDITIONS, copies of which, along with their sworn translations, will be an
integral part of this Sub-Loan Agreement, regardless of the transcription; and
CONSIDERING finally, that BANESTADO, in accordance with the LOAN AGREEMENT and
with the bank agreement, signed between BANCO DE ESTADO DO PARANA S/A and THE
BANK OF TOKYO - MITSUBISHI, LTD., dated December 11, 1998, was designated the
DEPOSITORY, on behalf of and to the account and risk of the STATE, with a view
toward carrying out all actions related to this transfer, particularly regarding
transfer and receipt of funds, the parties have agreed to the provisions of the
following Clauses:
CLAUSE ONE - NATURE, VALUE AND PURPOSE OF CREDIT
Through this Sub-Loan, the STATE will transfer to SANEPAR the funds of the LOAN
AGREEMENT, under the same conditions as the referenced agreement, an amount up
to JPY 15,243,015,847 (fifteen billion two hundred forty-three million fifteen
thousand eight hundred forty-seven Japanese yen), which for informational
purposes only, on this date is equal to BRR ___________ (___________), equal to
the amount disbursed or to be disbursed by JBIC to the STATE OF PARANA as of
January 1, 2002, in accordance with the disbursement procedures or payment
requests made by SANEPAR, to the account of its selected sub-projects and in
accordance with the expense categories and percentages of financing set forth
and listed in the Allocation of Loan Funds below.
Allocation of Loan Funds
Category % of expenses to be Interest Rate
financed
(A) Projects and Construction 65 4.0% per annum
(B) Consulting Services 100 2.3% per annum
(C) Future Expenses - -
PARAGRAPH ONE - The funds of this Sub-Loan Agreement are to be used exclusively
for systems to supply water and treat sewage in the areas served by SANEPAR as
provided for in the plan.
PARAGRAPH TWO - Future investments to be made in the exclusive service and
interest of the State of Parana are not part of this Sub-Loan agreement with
SANEPAR and are, therefore, excluded from the maximum amount mentioned in Clause
One.
PARAGRAPH THREE - The disbursements to be transferred to SANEPAR, as well as the
payments realized at its request, will be recorded in the currencies and in the
form stipulated in the LOAN AGREEMENT and the GENERAL TERMS AND CONDITIONS.
PARAGRAPH FOUR - The conversion from foreign currency to its equivalent value in
reals will be made in accordance with the rules set forth by Banco Central do
Brasil and agreed to with JBIC, as defined in the LOAN AGREEMENT and the GENERAL
TERMS AND CONDITIONS.
PARAGRAPH FIVE - The STATE may suspend the disbursements stemming from this
instrument if SANEPAR fails to comply with any of the economic-financial
obligations contained in the LOAN AGREEMENT.
CLAUSE TWO - AVAILABILITY
The funds will be placed at the disposal of SANEPAR in installments, as received
by the STATE from JBIC's funds, in accordance with the LOAN AGREEMENT mentioned
in Clause One. The STATE authorizes BANESTADO / ITAU to immediately transfer the
funds of each installment to SANEPAR, which are to be used for local expenses.
2
PARAGRAPH ONE - The commitment and disbursement procedures for funds or payment
requests directed to JBIC through the Loan Account will be handled only by the
ParanaSan Management Unit (UGP) of SANEPAR, to be carried out in the manner set
forth in the GENERAL TERMS AND CONDITIONS.
PARAGRAPH TWO - The amount of the disbursements alluded to in the above
paragraph will be transferred to linked account No. 3,770-9, in the name of
SANEPAR, at Agency 4131 of Banco ITAU in the city of Curitiba - PR, at the
request of its legal representatives.
PARAGRAPH THREE - Any delay in the release of funds caused by SANEPAR's
noncompliance with the clauses of the LOAN AGREEMENT and the GENERAL TERMS AND
CONDITIONS will be incumbent on SANEPAR.
CLAUSE THREE - CHARGES
(1) Interest will accrue quarterly on the amount transferred to SANEPAR
through this Sub-Loan Agreement at the rate of 4% (four per cent) per
annum on the principal, corresponding to categories (A), (B) and (C)
mentioned in Clause One, disbursed, unpaid, and hereinafter known as
"Principal (I)":
(i) Disbursement of principal by means of Loan funds allocated to
category (A);
(ii) Collections for services disbursed by means of the Loan funds,
related to disbursements of (l) (i) above;
(iii) Any Principal reallocated from Category (C) and disbursed in
relation to (1) (i) or (1) (ii) above.
(2) Interest will accrue quarterly on the amount transferred to SANEPAR
through this Sub-Loan Agreement at the rate of 2.3% (two point three per
cent) per annum on the principal, corresponding to categories (A), (B) and
(C) mentioned in Clause One, disbursed, unpaid, and hereinafter known as
"Principal (II)":
(i) Disbursement of principal by means of the Loan funds allocated to
category (B);
(ii) Expenses for services disbursed by means of the Loan funds, related
to disbursements of (2) (i) above;
(iii) Any Principal reallocated from Category (C) and disbursed in
relation to (2) (i) or (2) (ii) above.
PARAGRAPH ONE - The interest of items I and II of this Clause will be calculated
on the outstanding debt balance of this Sub-Loan Agreement, expressed in the
original currencies of the LOAN AGREEMENT, according to the same criteria
defined therein and according to the provisions of Clause Ten of that
instrument.
PARAGRAPH TWO - SANEPAR will pay to the STATE the interest owed under this
Sub-Loan Agreement on January 20 of each year, calculated up to January 19 of
that year from July 20 of the previous year, and on July 20 of each year the
interest owed up to July 19 from January 20 of that year, except that during the
period of disbursement of the Loan funds, SANEPAR will pay to the STATE on
February 20 of each year the interest owed up to January 19 of that year,
calculated
3
from July 20 of the previous year, and on August 20 of each year the interest
owed up to July 19 from January 20 of that year, always calculated on the basis
of the outstanding debt balance owed by SANEPAR, based on the disbursements that
have been transferred to it as of January 1, 2002.
CLAUSE FOUR - SERVICE FEE
SANEPAR will, as of January 1, 2002, assume the burden that was previously the
responsibility of the State of Parana, for a value equal to 0.1% of the value of
the Commitment or Disbursement Letter, in the form of a service fee, on the date
of issue of the respective Commitment Letter or the date of disbursement, on the
amounts transferred through this Sub-Loan Agreement for water supply and waste
treatment in the localities serviced by it.
An amount equal to the service fee will be financed by means of the loan funds
and JBIC will immediately credit this amount to itself, in the form of a service
fee, on the date of issue of the Commitment or Disbursement Letter. This credit,
taken from the loan funds, will constitute a legal and associated obligation by
the Borrower, under the terms and conditions of the LOAN AGREEMENT.
CLAUSE FIVE - AMORTIZATION
Amortization of the principal will be handled initially by the State of Parana
and recorded on the books until it reaches an accumulated total amortized
principal of JPY 8,442,984,153 and this amortization is subject to the terms of
the LOAN AGREEMENT, occurring therefore, from January 20, 2005 to July 20, 2011,
because as of July 20, 2011, SANEPAR will begin to amortize its part of the
outstanding balance of the principal owed (up to JPY 15,243,015,847), which by
this Sub-Loan Agreement will be assumed by it;
The principal of the debt arising from this Sub-Loan Agreement will be paid to
the STATE, beginning July 20, 2011, in 24 (twenty-four) quarterly payments
according to the schedule of payments set forth below, pursuant to current law,
SANEPAR thereby committing itself to pay, along with the last installment, all
outstanding obligations due and for which it is responsible, arising from this
Sub-Loan Agreement:
I - SCHEDULE OF PAYMENTS
I. Payment of Principal (I)
Date Due Amount (in yen)
July 20, 2011 430,407,756
Each January 20 and July 20 530,567,000
Beginning January 20 of 2012
Until January 20, 2023. Payment of Princinal (II)
Date Due Amount (in yen)
4
July 20, 2001 88,905,091
Each January 20 and July 20 109,594,000
Beginning January 20 of 2012
Until January 20, 2023
3. Total of Payments (I) + (II)
Date Due Amount (in yen)
July 20, 2011 519,312,847
Each January 20 and July 20 640,161,000
Beginning January 20 of 2012
Until January 20, 2023
II - GENERAL TERMS AND CONDITIONS
Other terms and conditions generally applicable to the LOAN AGREEMENT are set
forth in JBIC's General Terms and Conditions, dated November 1987, with the
following supplementary stipulations (hereinafter GENERAL TERMS AND CONDITIONS):
The term "principal," whenever mentioned in the General Terms and Conditions,
will be replaced by Principal (I) and Principal (II)";
When the borrower repays the principal or pays interest or other obligations,
without specifying the order of application, JBIC may decide the order of
application among the principal, interest and other obligations toward Principal
(I) or Principal (II).
If the payment of principal or payment of interest or other obligations under
the terms of the Loan is in arrears, the interest, specified in Clause Three -
CHARGES, will cease to accumulate on the amount of the principal in arrears on
the due date or thereafter and will incur a late fee, calculated at 1% (one per
cent) per annum on the interest rate stipulated in the LOAN AGREEMENT, to be
paid on the amount of principal, interest or other obligations in arrears,
during the period from the due date until the date immediately preceding the
actual payment, both inclusively.
III - SPECIAL CONDITIONS
In the event of a request by the State of Parana to SANEPAR for purposes of
making investments of its exclusive interest, in accordance with Paragraph Two
of Clause One, amortization of the financed finds allocated for such investments
will be made by the State of Parana in the order of the due date of the
installment payments, now its responsibility, pursuant to Item I of this Clause
(Payment Schedule).
CLAUSE SIX - DELINQUENT INTEREST
The installment owed within this Sub-Loan Agreement having fallen into rears,
whatever the reason may be, the STATE, regardless of judicial or extrajudicial
notice or summons, will collect in the form of delinquent interest 1% (one per
cent) per month on the amount of the installment past due, in addition to other
finance charges to which SANEPAR is subject.
5
CLAUSE SEVEN - PENALTIES
If the STATE must resort to judicial means in order to collect or settle the
amounts owed under this Sub-Loan Agreement, SANEPAR, being unable to reduce the
amounts stipulated in this Agreement, will pay, in addition to the principal,
finance charges and other contractual expenses, a penalty of 10% (ten per cent)
on the entire amount owed, including, moreover, judicial and extrajudicial costs
as well as legal fees on a base of 10% (ten per cent).
CLAUSE EIGHT - MONETARY EXPRESSION OF THE AMOUNT OF THE DEBT
The outstanding debt balance under this Sub-Loan Agreement, including principal,
compensatory and late interest, expenses, commissions and other charges, will be
expressed according to the provisions of the LOAN AGREEMENT, referred to in
Clause One of this instrument, and of the GENERAL TERMS AND CONDITIONS, which
comprise the terms referred to, with which SANEPAR is familiar and in full
agreement.
CLAUSE NINE - SPECIAL OBLIGATIONS OF THE BENEFICIARY
Until total settlement of all obligations for which it is responsible pursuant
to this Sub-Loan Agreement, SANEPAR commits to:
(a) Maintain records in combined or separate accounts, that reflect, in
accordance with appropriate and consistently applied accounting practices,
its financial transactions with reference to the execution of sit-projects
and disbursements of funds under this instrument, as well as prepare
financial statements that will be audited in each respective fiscal year
by independent auditors;
(b) Include in its schedule of expenses for each financial year, beginning
with the year in which the signing of this Sub-Loan Agreement takes place,
including and until final settlement of all obligations assumed in it, the
amounts necessary for payment of the principal, charges and expenses
arising from this transaction;
(c) Satisfy all other obligations that have been expressly set forth by JBIC
or the STATE for the execution of PARANASAN and for the extension of
credit, particularly those involving acquisition and commitment procedures
of the LOAN AGREEMENT.
CLAUSE TEN - ALTERATIONS
The clauses of this Sub-Loan Agreement may only be altered by amendment and by
mutual agreement of the parties, in accordance with the conditions of the LOAN
AGREEMENT.
6
CLAUSE ELEVEN - COURT
With regard to the settlement of any questions involving the execution of this
Sub-Loan Agreement that cannot be resolved through administrative mediation, the
Court of the City of Curitiba, capital of the State of Parana, has jurisdiction.
Therefore, having so agreed, the parties sign 3 (three) copies of this
Agreement, each of the same tenor and form for legal purposes, in the presence
of the undersigned witnesses.
Curitiba, January , 2002
STATE OF PARANA
XXXXX XXXXXX
GOVERNOR
XXXXXX XXXXXXX XXXX XXXXXXXX XXXXXX
SECRETARY OF STATE SECRETARY OF THE TREASURY
FOR PLANNING
XXXXXX XXXXXX XXXXXXXX XX XXXXXXX
PRESIDENT AND CHIEF EXECUTIVE OFF1CER OF SANEPAR
XXXXXXX DEL XXXXXX XXXXXXXX XXXX XXXX XXXXX XXXXXXX XXXXX
CHIEF FINANCIAL OFFICER OF ATTORNEY FOR SANEPAR
SANEPAR
WITNESSES:
-------------------------------------- --------------------------------------
Name/CPF (Taxpayer ID] Name/CPF (Taxpayer ID]
7
