Trading Update on Peru, Chile and Argentina

RNS Number : 1713G

Rurelec PLC

02 March 2015

 



2 March 2015                                                                

Rurelec PLC

("Rurelec" or "the Company")

Short Term Loan Facility

Trading Update on Peru, Chile and Argentina

The Directors of Rurelec PLC (AIM: RUR), the owner, operator and developer of power generation capacity internationally, are pleased to announce that, following the successful conclusion of a number of partnership deals, the Company has been able to reduce the size and improve the terms of its short term loan agreements with Radix Investment UK Limited ("the Radix Facility" or "the Facility").  The combined loans are now £550,000 and will be repaid on 31 March 2015 from the proceeds of the contracted sale of a controlling equity stake in Rurelec's Canchayllo hydroelectric plant in Peru.  Rurelec is due to receive net proceeds of US $6.5 million from this sale during the course of March.  As part of the reduction in the size of the facility, Rurelec has agreed with Radix not to issue the 16.8 million warrants to subscribe for new Ordinary shares in Rurelec at an exercise price of 7.3 pence per share previously announced on 24 December 2014. Rurelec will now be making the previously announced payment to IPSA Group PLC from the proceeds of US $6.5 million.

Cesar Flores is to remain as General Manager of and a shareholder in the Canchayllo plant.

A further development in Peru has been the release of the much anticipated Proinversion large hydro tender process for the award of new capacity contracts.  Rurelec's wholly owned Santa Rita project is expected to participate in this Proinversion tender.  While award of power purchase agreements will not occur until the end of 2015, the release of the official tender documents has permitted Rurelec's investment banking advisers in New York, INTL FC Stone, to put a firm timetable in place for the selection of a partner or partners to subscribe new equity at the project level in this US $550 million project of 255 MW for which Rurelec.  Participants in this formal Rurelec partner selection process include large regional electricity utilities, private equity funds and Asian multinationals.  Selection of a preferred partner is due to occur by May 2015.

In Chile, Rurelec's preferred partner for the purchase of a stake in the Illapa project has received investment committee approval to proceed to detailed binding agreements for the acquisition of a 50 per cent stake in the project. The offer values the equity of the Illapa project at US $60 million.

In Argentina, Rurelec continues to work on a transaction intended to release and repay in US dollars the bulk of the Company's project loans to its Energia del Sur combined cycle gas turbine power plant. Rurelec has now initiated a 40 MW expansion project in Comodoro Rivadavia for the installation of a 6B open cycle gas turbine under a new Resolution 220 contract with payments denominated in US dollars.  Energia del Sur continues to perform well and it remains one of the highest availability plants in Argentina.  This in turn has meant that it has been able to continue its monthly payments to Rurelec London in reduction of project loans

Commenting on the loan and recent developments, Peter Earl, CEO of Rurelec said:

"Our partnership negotiations are finally producing signed contracts. Rurelec has always intended to work in 50:50 partnerships in Latin America, as we have since our flotation in 2004, and that 50:50 policy continues with the  exception of hydroelectric plants where our target has always been to own no more than 20 per cent of any one plant.  This policy allows us to maximize our involvement with the minimal cash investment per plant. 

"We never intended to have so many greenfield developments on the go at any one time but that policy was forced upon us by the 2010 nationalisation of our Bolivian power plants, which were the main cash generators for the group.  We are now building new capacity to replace lost megawatts and we are successfully selling down stakes as we always planned to do.  Radix has helped us to achieve our goals.  The next step will be to conserve cash on our balance sheet in anticipation of a future return to dividends."

-Ends -

For further information please contact:

Rurelec PLC	W H Ireland	CNC Communications
Peter Earl, CEO	James Joyce, Paul Shackelton and James Bavister	Ana Ribeiro, Ian Brown
Tel: [phone]	Tel: [phone]	Tel: [phone]/ 020 3219 8817

Or visit our website: www.rurelec.com 

 

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