European Bank Syndicate in $330 Million Sale of Secured Debt of Major Argentine Water Company

March 9, 2006

Cleary Gottlieb represented the European Investment Bank syndicate in connection with the $330 million sale and settlement of the secured debt of Aguas Argentinas. The transaction involved the sale of the secured debt to the company’s principal shareholders, including Suez S.A. and Sociedad General de Aguas de Barcelona S.A., as part of a settlement of the principal shareholders’ obligations under certain sponsor support agreements entered into with the EIB bank syndicate (as guarantor of the company’s obligations under a loan facility issued by the European Investment Bank) and Aguas Argentinas’ other major creditors, including the International Finance Corporation.

Under the transaction, which followed on the heels of the breakdown in the negotiations between the company’s principal shareholders and the Argentine government over tariffs increases, the BNP syndicate and the company’s other secured creditors assigned all of their outstanding secured debt to the principal shareholders and terminated the various sponsors support agreements. These sponsor support agreements gave the secured creditors the right to put all of the outstanding debt to the principal shareholders in the event that the company’s 30-year water concession contract was terminated or revoked.

Aguas Argentinas held one of the world’s largest water concessions, under which it provided water and sewerage service to millions of residents in greater Buenos Aires. The Argentine government recently canceled Aguas Argentinas’ water concession after several attempts to renegotiate with the company’s shareholders and other potential private investors failed.

Cleary Gottlieb had also represented BNP Paribas in the interim debt restructuring of Aguas Argentinas in July 2004.