On January 20, 2011 Emgesa S.A. ESP executed its first issuance within the international capital markets for COP$737 billion (US $400 million equivalent), with a 10 years tenor. The aggregate principal amount of the notes is Colombian pesos denominated and the payment in U.S. dollars based on an exchange rate for the conversion of into U.S. dollars. Interest on the notes will accrue at a fixed rate of 8.750% per annum.
According to the Offering Memorandum, the Company increases the interest rate so that including the current withholding tax effect (currently 14% according to Article 408 from Colombian Tax Law – Estatuto Tributario), the bondholder will receive the fixed rate of 8.750% per annum. This means that the real coupon rate before WHT discount is 10.1744%.
The net proceeds from the sale of the notes were used to prefinance the resources required for El Quimbo hydro project during 2011 and part of 2012 and refinance existing financial obligations.
| Registration Format | 144 A/Reg S |
| Amount in COP$: | COP$737 billion |
| Equivalent Amount in US | US$400 million converted using the FX rate of January 20, 2011 (COP$1,841.90) |
| Use of proceeds: | Financing of new projects such as El Quimbo and refinancing of existing financial obligations and other general corporate purposes |
| Minimum denomination in Colombian pesos: | COP$5,000,000 each bond |
| Interest payment dates: | Interest will be payable in cash in U.S. dollars on January 25 of each year, commencing on January 25, 2012. Interest on the Notes will be computed on the basis of the actual number of days during the period inrespect of which interest is being paid, not to exceed 365, divided by 365. |
| Tenor: | 10 year bullet |
| Paying agent, transfer agent and listing agent: | The Bank of New York Mellon |
| Coupon: | 8.75% |
| Credit Rating at issuance: | BBB- (Positive) by Fitch Ratings / BBB- (Stable) by Standard & Poor’s |