Red de Carreteras de Occidente (RCO) has signed a new line with Banco Inbursa, S.A. as part of its refinancing plan.
RCO is the company behind the construction, operation and maintenance of several concessioned highways in Mexico. The firm is based in Guadalajara, Mexico.
The MXN4.6 billion line of credit matures in 2029 and accrues interest at a fixed rate. Amortizations will be made on a biannual basis and a debt service reserve fund will be maintained for an equivalent of the next six months of debt service. The proceeds of this credit line will be used to partially prepay the original acquisition loan due 2018. Once the prepayment is made, RCO estimates the acquisition loan's balance will decrease to MXN3,339 million.
Fitch said it has has reviewed the terms and conditions of the credit line and determined that the credit line has no impact on the ratings of the following Fitch-rated RCO issuances. Fitch believes it is reasonable to expect that RCO can successfully complete its total refinancing program.
The inclusion of this new line of credit allows RCO to refinance at a slightly lower rate than expected by Fitch and significantly reduce refinancing risk, as now only 17.7% of the MXN18,871 million that was held as debt under the acquisition loan by the end of 2012 would need to be refinanced during the next four years.
In July 2008, Red de Carreteras de Occidente (RCO) agreed a modification of its concession agreement to include the construction, operation, maintenance and preservation of a new toll-free road located east of Jiquilpan. This amendment allowed RCO to extend the term of the concession by 4.5 years, until 2042.RCO operates the following road stretches: