Innergex completes acquisition of two hydro facilities in Chile

Innergex Renewable Energy (TSX:INE) announced that Energia Llaima has completed the previously announced acquisition of the 140 MW Duqeco hydro project in Chile consisting of two hydro facilities.

Innergex has a 50 percent ownership stake in Energia Llaima.

As quoted in the press release:

The purchase price, net of an estimated US$10 million (C$12.8 million) of cash, is approximately US$210 million (C$268 million), subject to certain adjustments. A US$130 million (C$166.0 million) 15-year term financing has been arranged and underwritten by Itaú, a leading South American bank. The 15-year term is comprised of a bullet loan of US$70 million (C$85.9 million) and carries a variable interest rate for which the Corporation intends to reduce its exposure by entering into long-term hedging instruments. Proceeds of the loan will be used to pay a portion of the purchase price.

Energía Llaima’s net share of the remaining purchase price amounts to about US$80 million (C$102.2 million). Additionally, Energía Llaima made a deposit to secure financing of US$10 million (C$12.8 million). Both amounts will be paid through available funds under Innergex’s corporate revolving credit facilities. With these investments, and the US$10 million (C$12.8 million) invested in Energía Llaima at the time of the completion of the joint venture, Innergex’s commitment to invest US$110 million (C$140.5 million) in Energía Llaima over a 12-month period is almost reached.

The Duqueco hydro project consists of two hydro facilities commissioned in 2001, Peuchen (85 MW) and Mampil (55 MW), located on the Duqueco river, 60 km east of the city of Los Angeles, Chile. The Peuchen plant has a reservoir upstream with a 4-hour regulation at full capacity and up to 12-hour regulation at partial capacity, which also benefits Mampil. The aggregated average annual power generation is expected to reach over 350,000 MWh. Electricity produced by these hydro facilities is sold under power purchase agreements (PPAs) at fixed prices until 2020 and on the spot market. Adjusted EBITDA for the project should reach approximately US$21 million (C$26.8 million) annually.

“With this acquisition, we will leverage our expertise in managing hydro facilities. The reservoir attached to the facilities is a strategic asset in Chile,” said Michel Letellier, President and Chief Executive Officer of Innergex. “We now have four facilities in Chile and we look forward to growing Energía Llaima and increasing our presence in the South American market by developing and acquiring other renewable energy facilities.”

“We are pleased to pursue our development with this significant acquisition which adds 140 MW to our portfolio of assets,” said Ian Nelson, Chief Executive Officer of Energía Llaima. “This acquisition and our partnership with Innergex will allow us to perfect our knowledge in managing large hydro facility which will benefit our advanced stage development projects.”

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