Update regarding Energia del Sur & Working Capital

RNS Number : 9844L

Rurelec PLC

25 April 2018

 

Rurelec PLC

("Rurelec" or the "Company")

Update regarding Energia del Sur, S.A. & Working Capital

Further to the announcement of 7 December 2017, the Directors of Rurelec (AIM:RUR), have been informed that the management of Energia del Sur S.A. ("EDS"), which owns and operates the 136 MW Southern Patagonian CCGT power plant in Argentina, are expecting to  sign an Insurance Settlement Agreement accepting an accelerated insurance payment of US $2.5 million regarding a loss of profit and material damage claim.  The UK based insurance brokers to the insurance policy have confirmed that as of today they are holding funds of $2.493 million sent to them by the insurers to pay this claim and they expect funds to be transferred to EdS within days.   Anticipating this claim, EDS has resumed monthly debt repayments against the current outstanding debt of US $3.558 million owed to Rurelec Project Finance Limited ("RPFL"), albeit at a reduced level of US $300,000 per month for 5 months and has plans to make further debt repayments in cash during 2018 despite the reduction in its revenues, though there is significant uncertainty regarding the deliverability of those plans.  

As previously announced, the EDS plant has been operating at a reduced output following the September 2017 shutdown associated with the failure of certain blades in the steam turbine. The planned maintenance of the turbine, which had been expected to commence in April 2018 and which should restore the plant back up to full output, will suffer further delay due to CAMMESA's shortage of liquidity. CAMMESA is the organisation administering and regulating the Argentinian wholesale electricity market and had agreed to provide loan finance to enable the major maintenance to take place. This delay will affect the return of EDS's plant to full operating mode. EDS management is actively seeking alternative finance to proceed with that overhaul as soon as possible thereby mitigating its loss in revenue from operating at reduced output. 

Working Capital

Until Rurelec receives further insurance payments from EDS or EDS resumes full output or Rurelec sources alternative funds, Rurelec's working capital position will remain severely constrained. Given the fluidity of the situation with CAMMESA and the consequent uncertainty regarding the timing of when the plant will resume full generation, there is currently limited certainty associated with further debt repayments in 2018, including the monthly payments of US $300,000.

Further updates will be provided. 

For further information please contact:

Rurelec PLC	W H Ireland (Nomad & Broker)
Simon Morris, Director Andy Coveney, Director	Katy Mitchell Alex Bond
Tel: [phone]	Tel: [phone]

 

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