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Only one day after its fellow “Hidroituango” hydroelectric-project contractor Coninsa Ramon H filed for bankruptcy, Medellin-based construction giant Constructora Conconcreto likewise today (October 13) filed for bankruptcy, citing Colombia’s Comptroller-General proposed COP$4.3 billion (US$1.15 billion) fine for supposed “gross negligence” that allegedly caused an enormously costly 2018 diversion-tunnel collapse at Hidroituango, now almost completely recovered.

While Conconcreto states in the filing that its over-all financial outlook is “solid and positive,” nevertheless “the recent ruling in the first instance of the Office of the Comptroller General of the Republic for a figure of COP$4.3 trillion [US$1.15 billion] has an undeniable patrimonial and operational impact.”

The bankruptcy petition “aims to guarantee the sustainability of Constructora Conconcreto, maintain the more than 12,000 jobs that it currently generates, comply with all obligations and mitigate the uncertainty generated by speculation in the market and the eventual consequences of the ratification of the ruling of the Comptroller General of the Republic through the mechanisms provided by law,” according to the company.

“In the next few days, the negotiation phase of the reorganization agreement with the creditors participating in the process will begin,” the company added.

Commenting on the filing, Conconcreto president Juan Luis Aristizábal added: “We are prepared and committed to the country, Antioquia and their communities in the culmination of the Hidroituango project, critical for the energy stability of Colombia."

Antioquia Governor Gaviria Urges Insurance-Settlement Pathway

Meanwhile, Antioquia Governor Anibal Gaviria today publicly urged that any financial settlement over the diversion-tunnel collapse ought to be the exclusive province of Hidroituango project insurer Mapfre (along with other lesser insurers), with whom EPM has a damages policy totaling more than US$2 billion.

Mapfre has already paid US$350 million to EPM for Hidroituango damages, and likely would continue to make further payments -- barring some contradictory legal ruling putting blame for the tunnel collapse on contractors, consultants and politicians, rather than upon an unforseen, unpredictable tunnel fracture.

"The solution for Hidroituango has been, is and will be, as it should be: PAYMENT BY INSURANCE COMPANIES," Governor Gaviria publicly stated today, adding further emphasis by inserting all-capital letters.

This statement puts the Antioquia Governor in direct conflict with Medellin Mayor Daniel Quintero, who has issued wild, President-Trump-like conspiracy theories about "corruption" among former EPM officials and supposed negligence and/or conflicts-of-interest among contractors, consultants, former EPM officials and former politicians. Quintero has already sued the contractors and consultants for US$2.85 billion in a proceeding separate (but parallel to) the Comptroller-General's legal claims.


Medellin-based construction giant Coninsa Ramon H – one of the principal contractors to the US$5 billion “Hidroituango” hydroelectric project – this morning (October 12) filed a bankruptcy petition with Colombia’s Superintendencia de Sociedades (Supersociedades) regulatory agency.

Under Colombian law, the petition is known as an “Emergency Negotiation of a Reorganization Agreement (NEAR) under Law 560 of 2020,” according to Supersociedades.

“Within the framework of the procedure, the company must set a notice regarding the duration of the negotiation, notify the creditors of the beginning of the emergency negotiation and all the judges and entities that carry out executive, restitution, and guarantee enforcement processes or coercive collection, in order to be suspended during the process, and the company must start the negotiation with creditors and enter into the reorganization agreement in a term no longer than three months for confirmation by the Bankruptcy Judge,” according to the agency.

“The Emergency Negotiation of a Reorganization Agreement, established in Decree Law 560, is a mechanism for rescue and business recovery for those debtors who are affected by the causes that led to the declaration of the State of Economic, Social and Ecological Emergency, which allows to avert the crisis and preserve the company and employment through negotiation with creditors and the confirmation of a reorganization agreement,” the agency added.

Coninsa Ramon H is one of 26 companies, politicians and former Hidroituango officials hit by a proposed COP$4.3 trillion (US$1.15 billion) claim brought by Colombia’s Comptroller General (Contraloria General) for alleged “gross negligence” that supposedly triggered a costly 2018 collapse of a diversion tunnel at Hidroituango.

Potentially, Coninsa Ramon H and other companies could lose the current construction contract at Hidroituango and be forced to pay huge damage claims, possibly threatening the future viability of those companies.

In a September 6, 2021 press statement following the Comptroller-General’s claims announcement, the CCC-Ituango Consortium -- of which Coninsa Ramon H is one of the principal member companies -- announced that they will appeal the Comptroller’s claims.

“From what has been analyzed so far, the [Comptroller’s] ruling corresponds to issues that are eminently technical (project scheduling and tunnel construction), and we hope that the totality of the evidence that we provide is taken into account by all the instances to which we will resort,” according to that press statement.

While the Medellin City Council is mulling Medellin Mayor Daniel Quintero’s proposed sale of EPM’s 50% stake in the UNE-EPM telecom/internet/cell-phone/cable-TV joint venture with Spain-based Millicom, a new report from Wall Street bond rater S&P (BRC Ratings) ironically sees a brighter outlook for the unit, contradicting Quintero's gloom.

In an October 4 filing with Colombia’s Superfinanciera oversight agency, UNE-EPM discloses the latest S&P/BRC ratings report, which finds that the UNE-EPM internet/telecom unit – commercially known as “Tigo” -- continues to enjoy a strong “AAA” bond rating.

“For the next few years we project profitability margins close to 32.5% and leverage indicators (measured as net debt to EBITDA) around 2-x (times), which we consider consistent with the rating,” according to the ratings agency.

“Despite an environment of greater competition and high investment commitments, the generation of the company's own resources will continue to provide favorable levels of liquidity for the continuity of its operation, which reflects a ratio of sources-over-uses above 1.2-x for the next two years.

“Our assessment of Tigo reflects its favorable market position in most of its business lines. It ranks second as the most relevant operator in the internet, fixed telephony and TV segments, and the third in the mobile [cell-phone] market nationwide.

“This is supported by an adequate spectrum mix between the high and low bands after the award of access to 40 megahertz (MHz) of 700 MHz in 2019, which we believe will continue to provide a competitive advantage in the telecommunications industry in terms of higher levels of digitization and coverage.

“Despite increased competition in 2021, all business segments maintain favorable results,” according to the report.

While UNE-EPM posted a net loss in 2020, “as of June 2021, consolidated revenues grew 6.5% compared to the same period of the previous year, a result that contrasts with the negative 1.2% of 2020 that incorporates the effects of the pandemic, and which is above the record of the last three years,” according to the report.

“In the next two years, we estimate that the home segment will mitigate the reductions in the mobile business and the small and medium-sized business market, so we project revenue growth of close to 4% in the next two years.

“The strengthening of its sales channels and the greater offer of prices have pressured profitability margins by about 1.6 percentage points during the first half of 2021, registering an EBITDA margin of 32.4% from 34% in 2020.

“In our opinion, the cost of these measures will be offset by the higher level of consumption offered by the sustainability of its customer base. Thus, for the next two years we estimate margins above 32.5%, in line with the rating agency’s expectations,” according to BRC.

“We project relatively stable levels of leverage over 2x, even under the continuity of its operational and investment commitments. Under the current scenario of cash flow generation, we do not foresee that the company will increase its debt in the next two years, because these resources will continue to be adequate to fulfill its investment plans, the commitments acquired in the 700 megahertz auction (MHz) of 2019, and the payment of the renewal of their spectrum licenses.

“This result compares favorably with that of its peers within the same industry and companies within the same rating at the national level,” BRC added.

UNE-EPM “maintains strict control of the stability of its debt levels and maturity profiles, for which in 2021 it advanced the prepayment of US$150 million of its syndicated debt against the issuance of bonds at the local level. This in order to minimize its exchange rate exposure, which, as of June 2021, its debt in dollars was close to 20.2% of the total, down from 36.7% in 2020, and [the company has] improved its payment profile which, to date of this review, it maintained an average term of more than six years,” the report explains.

As for the capex forecast, UNE-EPM will be spending “between 5% and 6% of income generation for 2021 and 2022, a share that would remain in line with what the company budgets,” according to BRC.

“Under our liquidity scenario, cash sources will be above 1.2-x and 1.3-x in the next 12 and 24 months, respectively. This result allows us to confirm that Tigo will have adequate resources to meet its operational requirements and payment of financial obligations.

"In addition, we consider that the company has mechanisms to face stress scenarios, such as the flexibility of its investment plan, access to the capital market and available quotas in the financial system, which, as of June 2021, amount to a value of COP$3.6 trillion [US$948 million],” according to the report.

Medellin-based multinational insurance and health-care giant Grupo Sura just confirmed this afternoon (September 23) that its VaxThera biotech division will build a US$54 million plant and laboratory here in Antioquia for production of up-to-100-million bottles/year of vaccines for the Latin American market.

“The location was defined after a detailed analysis by a group of experts and consultants that took into account the conditions necessary for the company’s operations. Construction is projected to begin in the first quarter of 2022, to start operations in 2023,” according to the company announcement.

First word of the proposed plan to build the 35,000-square-meters plant in the metro Rionegro, Antioquia area, came from Antioquia Acting Governor Luis Fernando Suarez last week. But confirmation only came today directly from VaxThera.

“Our plant for the production and packaging of vaccines in Colombia will be located in eastern Antioquia,” according to VaxThera’s official announcement.

The new plant and laboratory will generate 500 jobs here, dedicated to “research and development of vaccines for the prevention and treatment of emerging infectious diseases in the Latin American region,” according to VaxThera.

The plant’s output will follow strict standards as demanded by the World Health Organization, the U.S. Food and Drug Administration (FDA), Colombia’s Invima medical-standards regulator, and the European Medicines Agency (EMA), according to the company.

While the plant will have capacity to produce around 100 million vials per year, VaxThera also “seeks to import and commercialize vaccines and other types of biologicals for Colombia and Latin America, and transfer the necessary technology to the country to produce and develop these types of products,” according to the company.

VaxThera aims to develop vaccines for treating coronavirus, dengue, chikungunya, yellow fever, influenza and Zika, the company added.

Coltejer Shuts Down Completely

Friday, 10 September 2021 08:36 Written by

Medellin-based textile giant Coltejer revealed in a September 9 filing with Colombia’s Superfinanciera oversight agency that it has decided to shutter all operations for what remains of 2021 -- and hinted of even more drastic, permanent measures coming.

“The suspension of productive activities will continue for the rest of this year 2021,” according to Coltejer.

“To date, the management team is analyzing some strategic issues that would allow it to reactivate some operations during the year 2022, among which we can highlight the following:

“a. The sale of fixed assets and product inventory.
“b. Real estate rental offer.
“c. Analysis of marketing strategies regarding the industry, clients, competitors and other market variables, which allows us to determine the relationship between the supply and the demand for textile products according to the capacity of the company.”

The Superfinanciera filing concludes with this ominous-sounding note about the company’s future: “We thank our suppliers, employees and other collaborators for all the support that they have given us.”

Coltejer and other major textile suppliers in Colombia have been suffering huge losses due to below-cost and contraband textile imports mainly from China and elsewhere.

The company racked up more red ink in second-quarter 2021 (see Medellin Herald 08/18/2021), shut down its non-woven fibers production in July (see Medellin Herald 07/16/2021) and announced closure of its historic, foundational factory in Itagüí last December (see Medellin Herald 12/18/2020).

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About Medellin Herald

Medellin Herald is a locally produced, English-language news and advisory service uniquely focused upon a more-mature audience of visitors, investors, conference and trade-show attendees, property buyers, expats, retirees, volunteers and nature lovers.

U.S. native Roberto Peckham, who founded Medellin Herald in 2015, has been residing in metro Medellin since 2005 and has traveled regularly and extensively throughout Colombia since 1981.

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