Empresas ICA may cancel highway transfers to CDPQ vehicle

20 November 2017 - 12:00 am UTC

Embattled Mexican developer Empresas ICA (ICA) could halt the sale of highway assets to its Operadora de Vías Terrestres (OVT) platform on the recommendation of its bankruptcy conciliator.

ICA signed a joint venture deal in June 2015 with Canada’s Caisse de dépôt et placement du Québec (CDPQ), agreeing to transfer four operational highway assets to OVT. It also meant giving OVT certain rights of first offer to acquire additional highway assets from ICA. The deal was valued at MXN 3.01bn (USD 198m as of 23 June 2015). 

A source close to the bankruptcy proceedings told Inframation that the firm’s bankruptcy conciliator, Ritch Mueller partner Thomas Heather, had advised ICA to renegotiate the terms of the joint venture with CDPQ as he determined that five clauses would negatively affect the value of ICA. 

CDPQ declined to comment, but the source said CDPQ would likely appeal the decision to modify the agreement. 

Inframation understands that the conciliator has called for the termination of five clauses from the JV. Two clauses prevent ICA from directly or indirectly participating in projects that could compete with those managed by OVT, as well as from investing in brownfield road projects.

One clause gave OVT preferential rights to acquire or participate in ICA’s future road projects. The last two clauses also granted OVT preferential rights for the participation in certain greenfield projects. 

According to the source, the obligations to offer projects to OVT could reduce ICA’s ability to sell assets at market value and prevent it from investing freely in road projects without OVT, thereby reducing ICA’s potential revenue. 

Empresas ICA failed to respond to requests for comment in time for publication. 

A second source consulted by Inframation said that under the terms of the agreement, ICA offered the Palmillas – Apaseo El Grande highway to OVT for additional investment but OVT rejected the opportunity to participate.

Infrastructure fund EXI – Fomento a la Energía e Infraestructura de México, which bought a 49% stake in CDPQ’s share of OVT, stepped in to complete the financing with a USD 40.5m commitment in February 2016 in exchange for a 30% stake in the highway.