Finance

Ecopetrol Secures a Monumental $1.2 Billion Loan Backed by the Colombian Ministry of Finance

In a recent declaration released from the vibrant heart of Colombia, Bogotá, dated March 20, 2024, Ecopetrol S.A. (BVC: ECOPETROL; NYSE: EC) announced its strategic financial maneuver, substantiated by the approval of a substantial loan worth up to USD 1,200 million. This move is a part of Ecopetrol's meticulous debt handling and maturity refinancing game plan, which has acquired the green light from the Colombian Ministry of Finance and Public Credit ("MHCP") through the assent of Resolution 0652 dated March 20, 2024.

Ecopetrol is to undertake the loan with a collaboration comprising a syndicate of top-tier financial institutions. The Bank of Nova Scotia will front a portion amounting to USD 300 million, while BBVA Securities Inc. will contribute an investment of USD 250 million. The package also includes USD 200 million each from Bank of America, N.A., and JPMorgan Chase Bank, N.A. In addition, the Itaú Chile New York Branch is pitching in USD 100 million, and a share of USD 150 million is being extended by Standard Chartered Bank Hong Kong Limited. Such structured distribution underscores a diverse and robust financial backing for Ecopetrol, reflective of a broad base of international support.

With a preliminary tenure set for five years, this loan’s primary is to be repaid at the conclusion of the maturity period. Interest rates will adhere to a variable scheme, as predefined by the involved parties in their contractual discourse. This financial structuring aims to benefit Ecopetrol in its strategic endeavors, shaping a debt repayment roadmap, that is conducive to its long-term commercial imperatives.

The sanctioning of the massive loan finds its roots in Ecopetrol's move to refinance an equivalent amount previously borrowed under a contract ratified by Resolution 1824 on July 30, 2021. The existing obligation saw maturity on August 16, 2023. The aforementioned loan, disbursed on September 29, 2022, was predominantly geared toward the refinancing of Ecopetrol's debt resulting from the procurement of Interconexión Eléctrica S.A., a pivotal step in Ecopetrol's strategic growth.

Ecopetrol, having adhered to all requisite internal and external procedures and approvals, stands compliant in its bid to secure the loan. This reflection of due diligence and corporate governance stands as a testament to the accountability and the structured approach undertaken by the company.

The terms and conditions of this loan serve as a testament to the international financial sector's faith in the Ecopetrol Group's direction and robustness. It is a clear indication of the supportive environment crafted by these financial institutions, buoying the group’s strategic financial initiatives.

MHCP’s scrutiny and authorization of the loan agreement terms provide for default clauses synonymous with such financial engagements. Should Ecopetrol falter in the timely servicing of principal and interest payments, encounter factors implicating its repayment abilities, or partake in conduct that might deface the authenticity of its financial reporting, the lenders possess the right to demand the expeditious settlement of the debt. Moreover, the contract articulates the scenarios which could lead to a breach of contractual commitments.

Should any of these predetermined events come to pass, the financial purveyors retain the authority to invoke the early repayment clause as delineated in the legal proceedings etched within the agreement. Furthermore, reciprocal rights are safeguarded for Ecopetrol, granting them the privilege to bring claims against the lenders in instances of non-fulfillment of the disbursement conditions stipulated in the loan parameters. This matrix of covenants and enforceable undertakings comes under the auspices of the New York State law, designated as the governing jurisdiction for the loan charter.

Ecopetrol reigns as the premier enterprise in Colombia and one of the major integrated actors in the energy forte across the Americas, boasting more than 18,000 personnel under its aegis. Domestically, it spearheads over 60% of the hydrocarbon production and governs the primary transportation, logistics, and refineries dedicated to hydrocarbons. The company also commands lead positions in sectors like petrochemical production and gas distribution. Ecopetrol's acquisition of a controlling 51.4% share in ISA has expanded its influence to managing energy transmission, operationalizing real-time systems through XM, and undertaking significant infrastructural concessions like the Barranquilla - Cartagena highway on Colombia's coast.

On the international stage, Ecopetrol's reach extends into strategic basins within the American geography. In particular, it maintains an active presence through drilling and exploration pursuits in the United States, specifically in the prolific Permian basin and the Gulf of Mexico regions. Ecuador and Mexico are other key terrains where Ecopetrol deploys its extractive operations. Furthermore, Ecopetrol, through its organizational relationship with ISA and its subsidiaries, takes pride in its power transmission business, which traverses Brazil, Chile, Peru, and Bolivia. The group's footprint is also visible in the realm of road concessions in Chile and the telecommunications landscape.

This communication also puts forward forward-looking statements which rest upon an anticipatory base and reflect Ecopetrol’s projections and conjectures for the times ahead. Equipped with optimistic terminologies such as "may", "will", "should", "expect", "anticipate", "estimate", "intend", "continue", and "believe", such prognoses also encapsulate a spectrum of projections and financial postulations. However, potential investors and shareholders are counseled to treat these forward-looking statements with the understanding that risks and uncertainties capable of significantly divaricating the actual from the projected do exist.

Notwithstanding, many vouched uncertainties and risks do not fall within the circumference of Ecopetrol's direct influence or control. The company, therefore, clearly states that there will not be any commitment to release supplementary information in the public domain, update the press release, or rectify any discrepancies that may be identified later, irrespective of future events or the emergence of new insights. The forward-looking statements must be interpreted in the light of their cool-off date, which coincides with this release.

Ecopetrol is available for additional insights and information through its dedicated point-of-contacts. Individuals or entities seeking for further clarification are encouraged to reach out to Carolina Tovar Aragón, who holds the reins as the Head of Capital Markets. She can be communicated with via the email address [email protected] Additionally, for any corporate communications related queries within Colombia, Marcela Ulloa is the go-to professional, and her correspondence channel is listed as [email protected]

To wrap this announcement, Ecopetrol S.A. stands as the SOURCE of this forward-looking financial pivot, setting the stage for continued fiscal resilience and infrastructural advancement within the Colombian framework and beyond.

For further reference and complete details, please direct your attention to the official Ecopetrol S.A. website, accessible through the URL: Ecopetrol Official Website. The site serves as a comprehensive portal for stakeholders and the interested public to glean an intimate understanding of Ecopetrol's operational dynamics, investment opportunities, and developmental initiatives.

In conclusion, Ecopetrol's adept orchestration of a USD 1.2 billion loan reflects a thoughtfully engineered thrust towards financial stability and growth. With the Colombian Ministry of Finance sanctioning this significant capital infusion, the company is poised to consolidate its industry standing and sail forward on its ambitious expansion trajectory, buoyed by the trust and partnership from a consortium of prime global financial institutions.