US$210 million A/R purchase and deferral from Republic of Panama

ARIAS, FABREGA & FABREGA has advised Citibank, N.A., Panama Branch, and The Bank of Nova Scotia, as joint lead arrangers in connection with a liability management transaction of the Republic of Panama involving the purchase of accounts receivables issued by the Ministry of Public Works under certain government contracts for an aggregate amount of USD$210 million. The purchased receivables were exchanged for new ones, issued by the Ministry of Public Works, and payable at a future date.

The account receivables were purchased by the banks from four (4) syndicates of banks that had provided financing for the works set forth in the government contracts. This includes the joint lead arrangers Citi and Scotiabank.

The transaction, requiring simultaneous negotiations with 12 local and international banks, two Panamanian ministries and other government agencies, had to be completed in less than three months so that the joint lead arrangers and other banks could purchase and defer accounts receivables arising from four different project contracts, in order to postpone the payment of the same.

ARIFA successfully coordinated the required modifications of government regulations to pave the way for an ARIFA-led transaction that involved preparing all the complex legal arrangements for the sellers, buyers, and government authorities.