Borrowings

12 Months Ended

Dec. 31, 2019

18	BORROWINGS

As of December 31, this item includes:


	Total				Current				Non-current
	2018		2 0 1 9		2018		2019		2018		2019
Bank overdrafts (Note 9)		119		—		119		—		—		—
Bank loans (a)		1,023,481		553,658		810,188		424,362		213,293		129,296
Finance leases (b)		33,488		22,980		13,514		9,749		19,974		13,231
Lease liability for right-of-use asset (c)		—		80,216		—		18,246		—		61,970
Other financial entities (d)		145,584		142,212		2,653		1,903		142,931		140,309

		1,202,672		799,066		826,474		454,260		376,198		344,806

Bank Loans

As of December 31, 2018, and 2019 includes bank loans in local and foreign currency for working capital. These obligations bear fixed interest rates ranging from 1.6% to 15.8% in 2018 and from 1.0% to 12.0% in 2019.


				Current						Non-current
	Interest	Date of		At December, 31						At December, 31
	rate	maturity		2018			2019			2018			2019
GyM S.A.	1.00% / 11.00%		2022		227,770			170,798	(iii)		—			26,401
Graña y Montero S.A.A.	9.10% / 10.10%		2022		206,836	(ii)		112,854	(iv)		125,547	(i)		—
Viva GyM S.A.	7.00% / 12.00%		2020		129,617			110,343			2,102			—
GMP S.A.	5.05% / 6.04%		2026		22,587			30,367			85,644			102,895
GyM Ferrovías S.A.	Libor USD 1M + 2%		2019		209,463			—			—			—
Concar S.A.	15.75%		2019		13,915			—			—			—

					810,188			424,362			213,293			129,296

Credit Suisse Syndicated Loan

In December 2015, the Company entered a US$200 million (equivalent to S/672 million) medium-term loan agreement with Credit Suisse AG, Cayman Islands Branch and Credit Suisse Securities (USA) LLC. The loan term is five years with quarterly installments starting on the 18th month. The loan bears interest at a rate of three months Libor plus 4.9% per year. The funds were used to finance the equity participation in GSP. On June 27, 2017, the Company renegotiated the terms of this loan to correct defaults related to the cancellation of the GSP concession. On June 26, 2019, the capital balance of the loan was paid in full (As of December 31, 2018, the principal balance of the loan amounts to US$37.5 million (equivalent to S/126.7 million).

ii)

GSP Bridge Loan

As of December 31, 2016, the balance of bank loans included US$129 million (S/433 million) of the corporate guarantee issued by the Company to guarantee the bridge loan granted to GSP, However, on June 27, 2017, the Company reached a refinancing agreement with Natixis, BBVA, SMBC and MUFJ for US$78.7 million (S/256.3 million), this amount was used to repay the GSP bridge loan. The new loan matures in June 2020.

On June 28, 2019, the capital balance of the loan was paid in full, (As of December 31, 2018 the principal balance of the loan was US$63.5 million (equivalent to S/214.5 million).

iii)

Financial Stability Framework Agreement

On July 31, 2017, the Company, and certain of our subsidiaries, GyM S.A., Construyendo Pais S.A., Vial y Vives — DSD and Concesionaria Vía Expresa Sur S.A., entered into a Financial Stability Framework Agreement (together with certain complementary contracts, the “Framework Agreement”) with the following financial entities: Scotiabank Perú S.A., Banco Internacional del Perú S.A.A., BBVA Banco Continental, Banco de Crédito del Perú, Citibank del Peru SA and Citibank N.A. The Framework Agreement aims to: (i) grant GyM S.A. a syndicated revolving line of credit for working capital for up to US$1.6 million and S/143.9 million, which may be increased by an additional US$14 million subject to certain conditions; (ii) grant GyM S.A. a line of credit of up to US$51.6 million and S/33.6 million; (iii) grant the Company, GyM S.A., Construyendo Pais S.A., Vial y Vives – DSD and Concesionaria Vía Expresa Sur S.A. a

non-revolving

line of credit to finance reimbursement obligations under performance bonds; (iv) grant a syndicated line of credit in favor of the Company and GyM S.A. for the issuance of performance bonds up to an amount of US$100 million (which may be increased by an additional US$50 million subject to compliance with certain conditions); and (v) to commit to maintain existing standby letters of credit issued at the request of GyM S.A. and the Company, as well as the request of Construyendo Pais S.A., Vial y Vives – DSD and Concesionaria Vía Expresa Sur S.A. In April of 2018, the Group repaid US$72.7 million (equivalent to S/245.8 million) of the facility with the proceeds of the sale of Stracon GyM S.A., and in July of 2018, an additional of US$15.4 million (equivalent to S/52.1 million). In August 2019, the Group paid the entire balance of Tranche B, equivalent to S/9.7 million and US$9.2 million. In September and October 2019, Tranche A was partially paid for S/.0.4 million and US$0.1 million; and S/0.5 million, respectively.

As of December 31, 2019, and the date of this annual report, there was US$44.2 million (equivalent to S/146.6 million).

GyM S.A. requested a waiver for a change in the Financial Stability Framework Agreement, in which at least 50% of the amount of Tranche A and up to 50% of the amount of Tranche A (project valuations) should be presented; the request was accepted by the lenders. As of December 31, 2019

and the date of this report, the value of client invoices and the value of project valuations is 65% and 134%, respectively, both percentages comply with the provisions of the approved waivers.

As of December 31,2019 and the date of this report, GyM S.A. is in compliance with the

ratios established

under the Financial Stability Framework Agreement and its waivers.

iv)

CS Peru Infrastructure Holdings LLC Loan

In July 2019, the Company entered into a medium

term loan credit agreement for up to US$35 million with CS Peru Infrastructure Holdings LLC. The term of the loan is three years, with quarterly installments of principal starting on the 18th month. The loan accrued interest at the following rates per annum: (i) for the period from and including July 31, 2019 (“Closing Date”) to but excluding the date that is 6 months after the Closing Date, 9.10%; (ii) for the period from and including the date that is 6 months after the Closing Date to but excluding the date that is

one

year

after the Closing Date, 9.35%; (iii) for the period from and including the date that is

one

year

after the Closing Date to but excluding the date that is 30 months after the Closing Date, 9.60%; and (iv) for the period from and including the date that is 30 months after the Closing Date to the third anniversary of the Loan, 10.10%.

The proceeds were used for working capital in the Company, GyM S.A. and Adexus S.A. As of the date of this report, the principal amount outstanding under this loan is still US$35 million (equivalent to S/112.9 million).

On November 21, 2019, due to the filing of a preventive bankruptcy process by its Chilean subsidiary, Adexus S.A., the Company received a communication from CS Peru Infrastructure Holdings LLC informing of the occurrence of an event of default under the terms of the credit agreement, according to section 7.02(e) and 9.09 of the agreement. As a result, as of December 2019, the loan was classified as current liabilities. However, as of February 2020, the Company obtained the waiver, therefore as of the date of this report, the loan was reclassified to non-current liabilities.

Financial Leases


					Current				Non-current
	Interest		Date of		At December, 31				At December, 31
	rate		maturity		2018		2019		2018		2019
Viva GyM S.A.		7.79% / 9.04%		2023		3,488		4,297		8,582		7,399
GyM S.A.		1.98% / 9.07%		2023		4,523		3,395		9,314		5,678
GMP S.A.		4.02% / 6.28%		2022		4,034		1,511		1,522		154
Concar S.A.		4.30% / 5.05%		2020		1,469		546		556		—

						13,514		9,749		19,974		13,231

The minimum payments to be made according to their maturity and the present value of the leasing obligations are as follows:


	At December 31,
	2018			2019
Up to 1 year		15,151			10,826
From 1 to 5 years		21,583			16,813

		36,734			27,639
Future financial charges		(3,246	)		(4,659	)

Present value of the obligations for finance lease contracts		33,488			22,980

The present value of the finance lease agreements obligations are as follows:


	At December 31,
	2018		2019
Up to 1 year		13,514		9,749
From 1 year to 5 years		19,974		13,231

		33,488		22,980

Lease liability for

right-of-use

asset (Note 3.1)


						At December, 31
	Interest			Date of		2019
	rate			maturity		Current		Non-current
GMP S.A.		6.59% / 7.80	%		2023		10,584		10,261
Graña y Montero S.A.A.		7.88	%		2027		4,888		50,362
GyM S.A.		7.65	%		2022		1,592		541
Concar S.A.		5.55	%		2024		1,171		806
Other minors		6.31% / 10.00	%		2020		11		—

							18,246		61,970

The minimum payments to be made according to their maturity and the present value of the lease liability for

right-of-use

asset obligations are as follows:


	At December 31, 2019
Up to 1 year		24,966
From 1 to 5 years		69,955
Over 5 years		7,603

		102,524
Future financial charges		(22,308	)

Present value of the lease liability for right-of-use asset obligations		80,216

The present value of the lease liability for

right-of-use

asset obligations are as follows:


	At December 31, 2019
Up to 1 year		18,246
From 1 year to 5 years		54,595
Over 5 years		7,375

		80,216

Other financial entities

Monetization of Norvial dividends

On May 29, 2018, an investment agreement was signed between the Company and Inversiones Concesion Vial S.A.C. (“BCI Peru”) - with the intervention of Fondo de Inversion BCI NV (“Fondo BCI”) and BCI Management Administradora General de Fondos S.A. (“BCI Asset Management”) to monetize the future dividends on Norvial S.A. that our Company will receive. The transaction amount was US$42.3 million (equivalent to S/138 million) and was completed on June 11, 2018.

It has also been agreed that the Company will have call options on 48.8% of the economic rights of Norvial that BCI Peru will maintain through its participation in Inversiones en Autopistas S.A. Such options will be subject to certain conditions such as the maturity of different terms, recovery of the investment made with the funds of the BCI Fund (according to different economic estimates) and/or the occurrence of a change of control. As of December 31, 2019, the balance of the loan payable amounts to S/142.2 million (S/145.6 million as of December 31, 2018).

Fair value of debt

The book value and fair value of financial liabilities are as follows:


	Carrying amount				Fair value
	At December, 31				At December, 31
	2018		2019		2018		2019
Bank overdrafts		119		—		119		—
Bank loans		1,023,481		553,658		1,152,885		572,019
Finance leases		33,488		22,980		38,399		23,027
Lease liability for right-of-use asset		—		80,216		—		96,799
Other financial entities		145,584		142,212		145,584		142,212

		1,202,672		799,066		1,336,987		834,057

In 2019, fair values are based on discounted cash flows using debt rates between 2.9% and 11.0% (between 2.4% and 8.9% in 2018) and are within level 2 of the fair value hierarchy.