Consortium-Nicaragua Advises BCIE, FMO and EDC in Syndicated Credit to Polaris Energy Nicaragua S.A. (PENSA)

Managua, Nicaragua, January 20, 2010 --( Consortium-Taboada & Asociados advised the Central American Bank for Economic Integration (BCIE), Nederlandse Maatschappij voor Ontwikkelingslanden Financierings-NV (FMO) and Export Development Canada (EDC) in a syndicated loan of U.S. $ 77 million awarded to PENSA, for the expansion of Phase I of the Geothermal Project “San Jacinto-Tizate”.

The legal services provided by Consortium-Taboada & Asociados began with the completion of a Due Diligence of PENSA, which covered topics, such as: corporate aspects, assets of the company, contracts of all kinds, insurance policies, litigation, labor and social security, environmental issues, taxes, fees and charges, and regulatory aspects, including the revision of the Power Purchase Agreement (PPA) and the Concession and Licensing Contracts.

According to the observations and recommendations, the firm advised the creditors in the various legal issues related to the financing, such as determining the structure of the security applicable to the credit and the preparation of the local documents to be executed. Through the Security Agreement different security mechanisms were created, such as mortgages over the properties where the project is located, industrial pledge over the machinery and equipment owned by the project, the assignment of major contracts necessary for the development of the project and the pledge over all shares subscribed and paid by PENSA. In addition, a mechanism for the administration of the security was developed, through the appointment of Banco de la Producción, S.A. (BANPRO) as local collateral agent.

The operation is governed by the laws of New York, Nicaragua and Panama, which made necessary the coordination of multi-jurisdictional legal advice. The legal services provided by Consortium-Taboada & Asociados were given by a comprehensive team of lawyers led by partner, Martha Lorena Icaza and associates, Alfonso Sandino, Olga Barreto, Adela Rodriguez, Samantha Aguilar and Maria Alejandra Sanchez. In rendering the legal services, Consortium-Taboada & Asociados worked in close coordination with the law firm Shearman & Sterling, LLP through its New York’s office. The transaction began in May 2009 and closed in the month of December 2009.

The purpose of the financing is to expand the current production capacity of Phase I of the Project from 10MW to 46MW in April 2011, and increase the generating capacity of Phase II of the Project from 46 MW to 72 MW in the last quarter of 2011.

This operation represents the largest transaction of electricity generation derived from renewable natural sources in Nicaragua, as is the case of geothermal energy. For this reason, the San Jacinto Tizate Project is an important source of generation of clean and low cost energy for Nicaragua, which will help the country reduce the dependence on oil derived energy and reduce the environmental impact.

Consortium Centro America Legal
Ivania Saballos
(505) 2254-5454