In the first place, Empresa Colombiana de Petroleos - Ecopetrol, the state owned oil and gas company in charge of the exploration and exploitation of oil and gas in Colombia, transfered and assigned for securitization purposes, the future production of oil under the Cusiana and Cupiagua oil fields (the "Fields"). The Fields represent one of the largest oil discoveries in the Western Hemisphere in recent years.
The transaction aims for Ecopetrol to pass the risk of production of oil to a foreign corporation which through its branch in Colombia, acts as the assignee (the "Assignee") of the rights to receive certain amounts of crude oil. Among the contracts involved in this complex transaction are an Assignment Agreement, and a Forward Oil Sale Agreement signed between the Assignee and another foreign corporation .
Additionally, and without regards to other ancillary contracts that are involved in the transaction, the Purchaser issued and placed certain notes with Qualified Institutional Buyers based on the United States' Rule 144A, Rule 501 and Regulation S. The Purchaser used the proceeds of the issuance to pay the purchase price to the Assignee. The note holders have the right to receive payment of interest and capital based on the oil actually produced within the production periods. This transaction allowed Ecopetrol to receive anticipated payment based on their reserves of oil.
On the other hand, the first structured finance transaction by an airline was made in Colombia. AVIANCA, Colombia's leading airline and flag carrier, entered into a securitization transaction to assign its rights to future payments (the Receivables), over the credit card sales of airline tickets within the U.S.
The Assignee was an offshore Trust that created with the purpose of purchasing the Receivables, issuing notes to investors, collecting cash flows and making payments on the notes to the noteholders. The notes have a final maturity of 8 years and an expected life of 5.13 years. G½mez Pinzon & Asociados acted as legal counsel in both transactions.
Prepared by Alejandro Linares and German Villamil from Gomez Pinzon & Asociados, Bogota, Colombia.
The content of this article is intended to provide a general guide but specialist advice should be sought about your specific circumstances.
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