Hogan Lovells counsels SADM in ensuring water access in Northern Mexico

Press releases | 01 November 2023

Monterrey, 1 November 2023 – Global law firm Hogan Lovells advised Servicios de Agua y Drenaje de Monterrey, I.P.D. (SADM) in structuring the construction, development, and operation of the Acueducto Cuchillo II aqueduct, significantly enhancing the water supply for the population of Nuevo León. The approximately US$600 million project involved a complex three-tier structure for construction, securitization, and senior financings, completing one of the flagship projects for the region’s state and federal government.

The development of the public works contract for this project involved extensive negotiations to establish risk mitigation mechanisms for potential contractor cross-defaulting, following unprecedented droughts in the region in 2022. Additionally, the contract included mechanisms to secure payment through funds flowing directly from several local public trusts. The amendment of these trusts included multiple lenders from unrelated projects, achieved within a notably short timeframe.

“Access to clean and safe water is an essential human right, and when a considerable portion of the population faced a dire lack of this vital resource, SADM took swift and effective action,” said Hogan Lovells Corporate & Finance partner René Arce, who is based in Monterrey and Mexico City. “We are proud to have advised SADM in this groundbreaking initiative, procuring and assembling a 93-kilometer pipeline and expanding five water pumping facilities to enhance water supply and mitigate anticipated droughts in 2023. This effort was also made possible through collaboration with multiple contractors and lenders who played a critical role in securing the necessary financing.”

In addition to Arce, Hogan Lovells’ legal team included support from counsel Ana Catalina Decanini and associates Dinorah Pensado, Armando Neavez, Alejandra González, and Sylvia Dávila, and Regina de Lira (all Monterrey).