Together with the previously revealed pending acquisition of a 44MW hydroelectric power project in Yunnan province, the projects are expected to add a total of 63MW to the company’s portfolio of operating hydroelectric assets.
In addition, the company has entered into two memoranda of understanding regarding the acquisition by the company of an additional 180MW of operating hydroelectric assets, 125MW of projects under construction and 341MW of development rights for new projects. Along with the definitive agreements, these memoranda present the company with the opportunity to acquire 709MW of hydroelectric power projects and development rights.
The agreement provides for the company to acquire 100% of the 19MW Husahe project, located in Yunnan province, for a purchase price of $15.5m. The acquisition, for which the company had a memorandum of understanding and which is expected to be consummated shortly, will be financed through cash on hand and a note from the seller, which may be refinanced with non-recourse bank debt from a local institution.
Previously, CHC executed an agreement for the company to acquire 100% of the 44MW Xiaopengzu project, also located in Yunnan province, for a purchase price of $57m. This acquisition, which the company anticipates consummating within the next 45 days, is expected to be financed through cash on hand and bank financing expected to be provided under the terms of the company’s loan framework agreement with the Bank of China’s Fujian Branch. Both acquisitions are subject to customary closing conditions, including obtaining governmental approvals.
The two memoranda of understanding provide the company with the right to acquire: a majority interest to control in the Taiyu projects, a group of seven operating hydroelectric projects aggregating 114.4MW in Fujian province; and 100% of the Minrui projects, a group of projects in Yunnan province including four operating hydroelectric projects aggregating 66MW, three projects under construction aggregating 125MW, and the development rights to nine projects aggregating 341MW.
