The Spanish company Construcciones y Auxiliar de Ferrocarriles (CAF) detailed part of its contract related to Line 12 of the Mexico City Metro.
On May 3, 2021, there was an interruption in the operation of Line 12 of the Mexico City metro in which the Grupo CAF, through a subsidiary, provides maintenance services on the trains operated by the Mexico City Metro. Mexico.
The service interruption was caused by the collapse of a section of said line due to responsibilities not attributable to the Grupo CAF.
To date, the Mexican authorities are in the process of investigating the events that occurred, carrying out repair work on the line for its reopening, and are holding negotiations with the Grupo CAF to reach an agreement on the economic effects of the paralysis of the line.
The contract contractually provided for a possible suspension, to which the parties have accepted by signing a Suspension Agreement for the effects of the contract.
Said agreement includes the maintenance of the obligation to pay the base consideration and the temporary suspension of the payment of the variable consideration, by the Metro, until the passenger transport service is fully or partially resumed or at the latest until 13 June 2022.
In relation to the Long-term Train Rental Service Provision Agreement (PPS–Line 12), dated December 7, 2012, the subsidiary company Provetren signed with a banking syndicate formed by BBVA Bancomer, Banco Nacional de México, Sumitomo Mitsui Banking Corporation and Caixabank, a long-term financing agreement for a maximum amount of US$300 million.
The interest rate accrued by the loan is referenced to LIBOR. To avoid fluctuations in the interest rate curve, and as is customary in this type of financing, Provetren maintained an Interest Rate Hedging Agreement for 80% of the financing and for 80% of the term, which has been canceled at maturity during financial year 2021, not having been renewed.
The principal of the loan will be repaid in 39 quarterly and consecutive installments, adjusting to the collection profile under the PPS, with the first due date in October 2013.
This contract includes certain restrictive clauses that limit Provetren, among others, from obtaining new bank loans, granting guarantees, making capital repayments, distributing dividends if certain ratios have not been reached, as well as maintaining certain financial conditions as of October 2013, including the Debt Service Coverage Index (which must be greater than 1.15), clauses that have been fulfilled during the years 2021 and 2020.
Additionally, the cash balances from the concession amounting to 13,970 thousand euros as of December 31, 2021 (9,512 thousand euros as of December 31, 2020) are in guarantee of the debt service, releasing the remaining balances quarterly, once compliance with the established covenants has been verified.