PANAMA SPONSORED ARTICLE
the international markets. This structure makes use of the tax exemption ac- corded by law to debt instruments listed on the Panama Stock Exchange and allows concessionaires to issue and sell 144A/Reg S notes to foreign note hold- ers without having to pay additional amounts on account of withholding taxes. This structure, pioneered by the $170 million Fortuna notes offer, has been successfully used in the $150 million ICA Corredor Sur notes offer, the $300 million AES Panama notes offer, the $100 million Elektra Noreste notes offer and the $220 million Trump Ocean Club notes offer. Another benefit of this structure is that it exempts the indenture, the underwriting agreement, the security agreements and all related agreements from stamp taxes in Panama.
Choice of law and jurisdiction The choice of a foreign law as the governing law of a loan agreement or an in- denture is valid under Panamanian law and it should be recognised and en- forced by the courts of Panama. Nevertheless, lenders must be aware that although the loan or notes may be subject to a foreign law, the concession agreement and the security interest agreements that relate to assets located in Panama, such as mortgages on real property and pledges over bank accounts with banks located in Panama, will remain subject to Panamanian law.
Estif Aparicio Partner
Arias Fábrega & Fábrega (ARIFA) Panama City, Panama
Tel: +507 205 7000 Email:
eaparicio@arifa.com Web:
www.arifa.com
The submission by the concessionaire to the jurisdiction of foreign courts
and the appointment of an agent in a foreign jurisdiction to accept service of process in respect of proceedings before such courts are valid stipulations under Panamanian law. However, lenders must be aware that any dispute relating to the concession agreement, unless the government has consented to arbitration, will be heard in the courts of Panama and the foreclosure of any security in- terest that requires judicial proceedings, such as foreclosure of a concession mortgage or a real property or chattel mortgage, will also be enforced in the courts of Panama.
Significant infrastructure projects are either already being worked on or are
being considered in Panama. These projects include the development of the Petaquilla copper mine, Panama’s largest copper deposit, further expansions of Tocumen Airport, the financing of new hydroelectric facilities, the expan- sion of national ports, the construction of new hospitals, the re-organisation of the Panamanian roads and highways and the financing of the subway for Panama City. It is certain that some of the legal issues discussed here will be relevant to these new projects.
About the author Estif Aparicio is an accomplished partner at Arias Fábrega & Fábrega (ARIFA). Mr Aparicio has worked on many of the most complex cross-border financial transactions in which the firm has participated in recent years. He has extensive experience in the areas of securities regulation, banking and finance, M&A and joint ventures, antitrust, trade and competition and taxation.
From 2004 to 2006, Mr Aparicio worked for the Panamanian government as chief trade negotiator of all bilateral and multilateral free trade agreements. In this role, he coordinated Panama’s participation in the Doha Round of the World Trade Organisation (WTO), successfully negotiating free trade agreements with the US, Singapore and Chile.
Before joining ARIFA, Mr Aparicio worked for Sullivan & Cromwell in New York, participating in capital markets, M&A and project finance transactions. He has a Master of Laws from the University of Houston Law Center and a Bachelor of Laws from the University of Panama.
Bar admission – Panama and New York.
Cecilio Castillero Senior international counsel
Arias Fábrega & Fábrega (ARIFA) Panama City, Panama
Tel: +507 205 7000 Email:
ccastillero@arifa.com Web:
www.arifa.com
About the author Cecilio Castillero is senior international counsel at Arias Fábrega & Fábrega (ARIFA). His practice focuses on international aspects of banking and finance, capital markets and M&A.
Mr Castillero has extensive experience representing leading financial institutions with a deep understanding of the market’s practices and standards, and clients’ internal policies. His broad expertise includes setting up a variety of structures, including syndicated and bilateral, secured and unsecured and domestic and cross-border financings. Mr Castillero also has outstanding deal management and organizational skills and extensive experience in coordinating multijurisdictional matters involving numerous parties and legal counsels.
Before joining ARIFA, he spent 10 years with the Global Finance Group at Milbank Tweed Hadley & McCloy in New York. Mr Castillero has a Juris Doctor from the Tulane University School of Law. He is admitted to the Bar in New York.
78 ENERGY & INFRASTRUCTURE | LATIN AMERICA 2013
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