CTG leads acquisition of Odebrecht's hydro plant in Peru
Chinese investors agree to pay $1.39bn for the Chaglla hydroelectric plant, capping a deal that took more than two years to complete, sources say
A consortium led by China Three Gorges (CTG) has agreed to
buy the Chaglla hydroelectric power plant in Peru from Brazil's
Odebrecht for $1.39bn, putting the final touch on a deal that
has spanned more than two years.
The CTG-led consortium, which includes Hubei Energy Group,
Ace Investment Fund and CNIC Corporation, conducted the
acquisition through the Huallaga Holding Company, a limited
liability company registered in Hong Kong, Odebrecht's Latin
American subsidiary, Odebrecht Latinvest, said in a
The investors will cover approximately half of the purchase
price with equity and make up the rest with debt, a source
familiar with the transaction
The group will likely get a bridge loan to pay for part of
the acquisition, followed by a takeout in the debt capital
markets, a second source said.
Odebrecht will use the proceeds to pay off fines in Peru,
the sources said. Earlier this year, the Peruvian government
ordered the company to leave the country after it admitted to
paying $29m in bribes between 2005 and 2014. Odebrecht is not
allowed to take any money out of Peru until it has paid the
fines, the first source said.
The company will also use the proceeds to make substantial
debt repayments, the second source said.
The transaction is subject to regulatory approval from
authorities in Peru and China.
Chinese companies have recently made a number of high-value
acquisitions in the power and infrastructure sectors in Latin
America. From State Grid buying
CPFL Energia to CTG snaring
Duke Energy’s Brazilian business, both sources
said Chinese state-owned enterprises have a government mandate
to grow in core areas.
"The key is to stick to core business areas," the first
source said. Chinese contractors are also poised to benefit
from ancillary business opportunities in the region.
Located in northern Peru, the 456 MW Chaglla facility had
generated interest from Canadian investor Brookfield,
Chilean utility Colbun and US energy investor Contour Global,
sources previously told LatinFinance.
secured $774m in project financing for Chaglla from
commercial and multilateral lenders in July 2013 and signed a
15-year power purchase agreement with state-owned Electroperu
in October 2016.
Itau BBA, Scotiabank and SMBC Nikko were the financial
advisors for Odebrecht, while White & Case was the legal
advisor. Bank of America Merrill Lynch was the financial
advisor to the CTG-led group, while Sullivan & Cromwell was
the legal advisor.