Latham & Watkins advised Global Infrastructure Partners (GIP), one of the world’s largest independent infrastructure managers, and its newly acquired Mexican portfolio company, Saavi Energía, in the US$350 million Rule 144A/Regulation S offering by Electricidad Firme de México Holdings (EFM) of 4.9% Senior Secured Notes due 2026. The five-year notes, which represent the issuer’s debut in the international capital markets, are guaranteed by EFM’s direct subsidiary Electricidad Cometa de México (ECM) and were used in part to refinance bridge facilities borrowed in connection with GIP’s August 2021 acquisition of Saavi Energía, in which Latham represented GIP.
Saavi Energía is one of the largest independent power producers and the largest privately held stand-alone power generator in Mexico. EFM and ECM are Mexican utility holding companies whose primary asset is an ownership interest in Cometa Energía, a Mexican utility holding company that develops, owns and operates power generation facilities and other energy infrastructure in Mexico, including six operating combined cycle gas-fired power generation turbines, three operating natural gas compression stations, and one associated operating natural gas pipeline. Saavi Energía owns a total net generation capacity of 2.3 GW, developed through various brownfield acquisitions and greenfield development, with significant cash flow diversification through different offtaker categories, business segments, and regional markets.
The high-yield covenant package, which does not contemplate reserve accounts or other cash-trapping mechanisms, coupled with flexibility to put additional loans and letters of credit in place through a pre-negotiated intercreditor arrangement, represent an important move for Saavi Energía away from a project finance-style package and towards more corporate-style financing. The issuer’s Netherlands and Luxembourg parent entities and the Mexican issuer and subsidiary guarantor granted security interests via Mexican pledges in certain assets as collateral for the obligations, including the parents’ shares in the issuer and substantially all of the issuer’s and subsidiary guarantor’s assets. Cometa Energía’s US$786 million of outstanding project bonds remain in the market, and the bonds received independent long-term debt ratings from Moody’s and Fitch that are linked to Cometa Energía’s credit profile. The bonds were listed on the Singapore Exchange.
Latham represented GIP and Saavi Energía in the offering with a deal team led by capital markets partners Gianluca Bacchiocchi and Roderick Branch, both members of the firm’s Latin America Practice, with associates Daniel Chor, Carolina Bernal, and Francisco Lascurain. Tax partner Rene de Vera advised on tax matters. Finance partner David Penna and associate Costanza García advised on matters relating to the bridge takeout. Singapore associates Kelly Teoh and Sarah Soh assisted with Singapore listing matters.