TAG Pipelines Sur in over $1 Billion Project Finance

December 26, 2014

Cleary Gottlieb represented TAG Pipelines Sur, a Mexican 50:50 joint venture between Pemex and GDF Suez, in the over $1 billion project financing for the construction and operation of the Ramones II Sur natural gas pipeline. The Ramones II Sur pipeline is the first half of the Ramones Phase II pipeline to be constructed. When completed, it will span approximately 180 miles from San Luis Potosí in Central Mexico to Guanajuato in South-Central Mexico. Crédit Agricole served as intercreditor agent and documentation bank.

The financing includes a term facility, a standby facility, a VAT facility and a working capital facility, as well as interest-rate and currency hedge agreements. The term loan is being provided by an international consortium of banks and Mexico’s development banks Nafin and Banobras. Cleary Gottlieb also represented P.M.I. Holdings (Pemex), TAG Pipelines (Pemex) and MPGV (GDF Suez), the sponsors of the project, in the execution of an equity contribution agreement. The sponsors committed over $222 million.

The financing is secured by a mortgage of over one thousand real-estate titles over the land comprising the project, a trust and an all-asset pledge over the project company’s assets, including off-shore and on-shore accounts, and the revenues of the main operating and transportation contracts. The financing agreements were signed on December 11, 2014. The transaction closed on December 19, 2014 and was first disbursed on December 26, 2014.