Treaty (31 October 1985)

October 31, 1985

AGREEMENT BETWEEN THE CENTRAL BANK OF THE PHILIPPINES WITH THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES AS GUARANTOR AND THE GOVERNMENT OF THE KINGDOM OF DENMARK

The Central Bank of the Philippines and the Government of the Kingdom of Denmark have, in accordance with the Agreement reached at the meeting held in Paris on December 19 and 20, 1984, between on the one hand representatives of the Government of the Philippines and on the other, representatives of the Governments of Australia, Austria, Belgium, Canada, Denmark, Finland, France, the Federal Republic of Germany, Italy, Japan, the Netherlands, Spain, Switzerland, the United Kingdom and the United States of America, agreed as follows:

ARTICLE 1

The present Agreement shall apply to the servicing of debts which are owed pursuant to the Danish Government Loans to the Republic of the Philippines of March 19, 1971, March 27, 1974, and March 3, 1978 (hereinafter called the Loans), and to contracts entered into before April 1, 1984, related to commercial credits guaranteed by the Danish Export Credit Council, which under the original contracts were for a term of more than one year (hereinafter called the Commercial Credits). The Central Bank of the Philippines assumes full liability for the due fulfillment of all payments to be made under this Agreement in respect of the debts specified in Annexes 1 and 2. The fulfillment of the obligations of the Central Bank of the Philippines, according to the present Agreement, is guaranteed by the Government of the Republic of the Philippines. As for the private sector the Central Bank of the Philippines shall enjoin the relevant Philippine debtors to make peso deposits with the Central Bank of the Philippines corresponding to the amounts due under the original contracts, to the extent that such deposits have not already been made. As from the date of any such peso deposit the Central Bank of the Philippines shall assume the full exchange risk and the transfer liability in the contractual currency in respect of the relevant amount as well as the full liability for the payment of interest thereon in accordance with Article 4. Amounts which have not been deposited 6 months after the due dates stipulated under the original contracts, or 6 months after the signing of this Agreement are not covered by this Agreement and shall be treated in accordance with Article 5. The Central Bank of the Philippines shall advise the Danish Export Credit Council of the receipt of any peso deposit from a private debtor within 30 days from the receipt of such a deposit, as well as of the details of such a deposit.

ARTICLE 2

The Kingdom of Denmark commits itself to restructure 100% of the principal amounts of the Loans and the Commercial Credits and 60% of the contractual interest amounts on the Commercial Credit falling due from January 1, 1985, up to June 30, 1986, inclusive. Repayment by the Central Bank of the Philippines of the amounts mentioned above will be made in 10 equal and successive semi-annual instalments according to the following schedule: 10% on March 15, 1991 10% on September 15, 1991 10% on March 15, 1992 10% on September 15, 1992 10% on March 15, 1993 10% on September 15, 1993 10% on March 15, 1994 10% on September 15, 1994 10% on March 15, 1995 10% on September 15, 1995 The remaining 40% of contractual interest will be paid according to the following schedule: - one third according to the original schedule; - one third on September 15, 1986; - one third on September 15, 1987. The amounts of principal and contractual interest due as at December 31, 1984, and not paid, on the Loans and the Commercial Credits will be paid according to the following schedule: - 25% on June 15, 1985 - 25% on December 15, 1985- 50% on June 15, 1986 Any amount which should have been paid on June 15, 1985, but remains unpaid shall be paid within 30 days from the date of the signing of this Agreement, subject to the deposit of the equivalent pesos in the case of the private sector.

ARTICLE 3

The debts referred to in Articles 1 and 2 are agreed to be the following amounts:

A. Related to the Loans: Danish Kroner 9,970,000.- B. Related to the Commercial Credits: Danish Kroner 69,441,321.91 US$ 4,489,062.50 A revised repayment schedule for the Loans is attached as Annex 1. If needed, this list may be altered by agreement between the Government of the Kingdom of Denmark and the Central Bank of the Philippines acting on behalf of the Government of the Republic of the Philippines. The amounts mentioned under B are specified in the list attached as Annex 2. If needed, this list may be altered or amended by agreement between the Danish Export Credit Council, acting on behalf of the Kingdom of Denmark, and the Central Bank of the Philippines with regard to such alterations and amendments. Both Annexes are an integral part of the Agreement.

ARTICLE 4

A. The instalments of the Loans restructured under this Agreement shall continue to be free of interest.

B. The Central Bank of the Philippines shall pay interest on restructured Commercial credits including arrears as at December 31, 1984, calculated on the basis of a 365 day year. The rates, which shall be calculated from the due dates stipulated in the original contracts as concerns the public sector debts, are agree to be:

a) 10.75 per cent per annum on debts owed in Danish Kroner.

b) The rate of interest on debts owed in US dollars will be determined by the Government of the Kingdom of Denmark on the second business day prior to the commencement of the relevant interest period in the following way: The Government of the Kingdom of Denmark will request three prime banks in the London Interbank Market to inform the Government of the Kingdom of Denmark of the rate at which six-month Euro-dollar deposits are offered to them as of 11.00 a.m. (London time) on such interest determination date. The Government of the Kingdom of Denmark will then calculate the arithmetic mean of the quotations (if necessary, rounded up to the nearest l/l6th of the one per cent), and then add 0.625 per cent. If any interest payment date would otherwise fall on a day which is not a business day in London, it shall be postponed to the next day which is a business day. The first payment of interest accruing up to and inclusive September 15, 1985, shall be made on October 31, 1985. Payment of interest shall thereafter be made semi-annually on March 15 and September 15 of each year. In the event that an amount has not been received on the due date falling due after the date of this Agreement, the Central Bank of the Philippines shall pay interest on such amount from the due date up to and including the day of actual payment at a rate which by 1.00 percentage unit per annum exceeds the rates mentioned above.

ARTICLE 5

The Central Bank of the Philippines undertakes to authorize as soon as possible the transfer of all payments related to official credits and guarantees from the Kingdom of Denmark which are not covered by the present Agreement.

ARTICLE 6

The payments referred to in Article 2 concerning the Loans shall be made to the Account No. 8059-6 of the Danish Ministry of Foreign Affairs with Danmarks Nationalbank. The payments referred to in Articles 2 and 4 concerning the Commercial Credits shall be paid to the account of the Danish Export Credit Council, Account No. 404-12425 with A/S Faellesbanken, Codanhus Branch, 60 Gl. Kongevej, 1850 Frederiksberg C.

ARTICLE 7

The Central Bank of the Philippines will not charge any administration fee to the Government of the Kingdom of Denmark in relation to the transfer of the agreed amounts. Any payment to be made by the Central Bank of the Philippines under this Agreement shall be free and clear of Philippine taxes.ARTICLE 8 The payment obligation of the Central Bank of the Philippines under this Agreement substitutes the payment obligation of original debtors. Other rights and obligations of individual creditors and debtors under their original contracts remain unaffected.

ARTICLE 9

Notwithstanding the provisions and terms of the present Agreement, the Government of the Republic of the Philippines commits itself to accord to Denmark a not less favourable treatment than might be accorded to any other creditor country in connection with restructuring of debts comparable in nature to those embraced by the present Agreement.

ARTICLE 10

The present Agreement shall enter into force on the date of signature.

Done in duplicate in the English language on this day of 31st of October, 1985, at Manila, Philippines. For the Central Bank For the Government Of the Philippines of the Kingdom of Denmark

(Sgd.) (Sgd.) BENT WITTRUP CHRISTENSEN Charge d'Affaires, e.p. For the Government Of the Republic of the Philippines as Guarantor

(Sgd.)

ANNEX 1

Revised Repayment Schedule for the Danish Government Loans to

the Philippines of March 19, 1971 (Loan no. I), March 27, 1974 (Loan no. II) and March 3, 1978 (Loan no. III) (Figures in Danish Kr.) Outstanding amount on .01.1985 18.378.824 24.165.392 39.997.448 82.542.06 Revised date of repayment Date Arrears as per 31.12.1984 totalling 15.06.1985 207.500 207.500 415.00 D.Kr. 1.660.000 15.12.1985 207.500 207.500 415.00 15.06.1986 415.000 415.000 830.00 01.10.1986 830.000 830.000 1.110.000 2.770.00 01.04.1987 830.000 830.000 1.110.000 2.770.00 01.10.1987 830.000 830.000 1.110.000 2.770.00 01.04.1988 830.000 830.000 1.110.000 2.770.00 01.10.1988 830.000 830.000 1.110.000 2.770.00 01.04.1989 830.000 830.000 1.110.000 2.770.00 01.10.1989 830.000 830.000 1.110.000 2.770.00 01.04.1990 830.000 830.000 1.110.000 2.770.00 01.10.1990 830.000 830.000 1.110.000 2.770.00 15.03.1991 249.000 249.000 333.000 831.00 01.04.1991 830.000 830.000 1.110.000 2.770.00 15.09.1991 249.000 249.000 333.000 831.00 01.10.1991 830.000 830.000 1.110.000 2.770.00 15.03.1992 249.000 249.000 333.000 831.00 01.04.1992 830.000 830.000 1.110.000 2.770.00 15.09.1992 249.000 249.000 333.000 831.00 01.10.1992 830.000 830.000 1.110.000 2.770.00 15.03.1993 249.000 249.000 333.000 831.00 01.04.1993 830.000 830.000 1.110.000 2.770.00 15.09.1993 249.000 249.000 333.000 831.00 01.10.1993 830.000 830.000 1.110.000 2.770.00 15.03.1994 249.000 249.000 333.000 831.00 01.04.1994 830.000 830.000 1.110.000 2.770.00 15.09.1994 249.000 249.000 333.000 831.00 01.10.1994 830.000 830.000 1.110.000 2.770.00 15.03.1995 249.000 249.000 333.000 831.00 01.04.1995 948.824 830.000 1.110.000 2.888.8215.09.1995 249.000 249.000 333.000 831.00 01.10.1995 0 830.000 1.110.000 1.940.00 01.04.1996 830.000 1.110.000 1.940.00 01.10.1996 830.000 1.110.000 1.940.00 01.04.1997 830.000 1.110.000 1.940.00 01.10.1997 830.000 1.110.000 1.940.00 01.04.1998 830.000 1.110.000 2.035.39 01.10.1998 925.392 1.110.000 1.110.00 01.04.1999 0 1.110.000 1.110.00 01.10.1999 1.110.000 1.110.00 01.04.2000 1.110.000 1.110.00 01.10.2000 1.110.000 1.110.00 01.04.2001 1.110.000 1.110.00 01.10.2001 1.110.000 1.110.00 01.04.2002 1.110.000 1.110.00 01.10.2002 1.147.848 1.147.84 _____________________________________________________________ TOTAL 18.378.824 24.165.392 39.997.448 82.542.06 __________________________________________________ Arrears as at 31/12/1984 EKR ref. no. Eksporter Buyer due date P I due date P ______________________________________________________________________________ AB 10045-684 RFM Brdr. Gram A/S Corporation 9/04-85 DKR 188.241,25 DKR Manila 9/10-85 DKR 188.241,25 DKR 9/04-86 DKR 188.241,25 DKR ______________________________________________________________________________ AB 11501-031 Vitarich Lindholst & Co. Corporation, 13/07-85 DKR 166.145,00 DKR A/S Manila ________________________________________________________________________________________________________________________ AB-K 13398- Vitarich 395.185,00 020 Hans Jessens Corp. Manila 24/11-84 DKR DKR 124.484,00 31/01-85 DKR 88.356,00 DKR Maskinbyggeri 24/05-85 DKR 395.185,00 DKR A/S 31/07-85 DKR 88.351,00 DKR 24/11-85 DKR 395.185,00 DKR 24/05-86 DKR 395.185,00 DKR _______________________________________________________________________________ AB-K 10046- Davao Union 517.968,75 12036 F.L. SmidthCement Corp. 19/12-84 USD USD 1.547.000,00 19/06-85 USD 517.968,75 USD & Co. A/S Manila 19/12-85 USD 517.968,75 USD 19/06-86 USD 517.968,75 USD _________________________________________________________________________________ 7-S (Skib) National 10403-12003 Maritime 25/11-84 - DKR 11.108.625,00 25/05-85 DKR Helsingør Værft Polytechnic 25/11-85 DKR A/S Manila 25/05-86 DKR ________________________________________________________________________________________________________________________ 11076-10131 1 - P.N.O.C. - DKR 801.808,10 (2-3-4) B&W Coal Corp. 30/12-83 DKR 733.857,94 28/02-85 DKR 752.181,88 DKR Alpha Diesel A/S Manila 30/12-83 DKR 752.181,88 25/05-85 DKR 775.660,57 DKR 28/02-84 DKR 775.660,57 30/06-85 DKR 801.808,10 DKR 25/05-84 DKR 801.808,10 30/06-85 DKR 733.857,94 DKR 30/06-84 DKR 733.857,94 28/08-85 DKR 752.181,88 DKR 30/06-84 DKR 752.181,88 25/11-85 DKR 775.660,57 DKR 28/08-84 DKR 775.660,57 30/12-85 DKR 801.808,10 DKR 25/11-84 DKR 801.808,10 DKR 415.947,98 30/12-85 DKR 733.857,94 DKR 30/12-84 DKR 733.857,94 DKR 396.895,01 28/02-86 DKR 752.181,88 DKR 30/12-84 DKR 363.259,68 25/05-86 DKR 775.660,57 DKR 30/06-86 DKR 801.808,10 DKR 30/06-86 DKR 733.857,94 DKR______________________________________________________________________________ Total DKR 8.057.866,02 USD 517.968,75 DKR 12.409.211,67 DKR 11.283.656,22 DKR USD 1.547.000,00 USD 1.553.906,25 USD