China Eximbank provides RMB 700 million loan for 456MW Chaglla Hydroelectric Power Plant Acquisition Project (Linked to Record ID#89647, 96415)

Project narrative

On April 25, 2019, Chaglla Holdings Limited — a special purpose vehicle incorporated in Hong Kong and joint venture of China Three Gorges Corporation (CTG), Hubei Energy Group Co., Ltd., Ace Investment Fund II LP, and CNIC Corporation Limited — signed an $850 million syndicated bridge loan and letter of credit agreement with the Luxembourg Branch of Bank of China Limited, the Luxembourg Branch of Industrial and Commercial Bank of China Ltd (ICBC), and BBVA Banco Continental del Perú to acquire the 456MW Chaglla hydroelectric power generation plant and related assets, including all transmission lines to interconnect the plant to the Peruvian national grid. Bank of China's contribution to the syndicate is captured via Record ID#89647. ICBC’s contribution to the syndicate is captured via Record ID#96415. The loan carried a 2-year maturity and an unknown interest rate. The loan was secured by (i.e. collateralized against) trust pledges on the assets of Empresa de Generación Huallaga SA, a trust over the cash flows of Empresa de Generación Huallaga SA, and accounts and shares issued by the borrower. The Bank of New York Mellon acted as offshore collateral agent, while Scotiabank Perú acted as onshore agent and trustee and ICBC Perú acted as debt and equity escrow agent. The borrower was expected to use the proceeds of the loan to (a) acquire Empresa de Generación Huallaga S.A. (EGH) from Odebrecht Energía del Perú SA and Odebrecht Energía SA for $1.39 billion; and (b) pay off the liabilities of EGH to a bank syndicate (consisting of Inter-American Development Bank, BNDES, and Deutsche Bank) that financed the hydroelectric plant during the project’s greenfield stage. The acquisition, which was funded with debt and equity contributions from the owners of Chaglla Holdings Limited, was completed on April 25, 2019. The Hubei Branch of China Eximbank also issued an RMB 700 million overseas investment loan to Chaglla Holdings Limited in April 2019 for the 456MW Chaglla Hydroelectric Power Plant Acquisition Project (as captured via Record ID#105700). The borrowing terms of the loan are unknown. Empresa de Generación Huallaga (EGH) is a project company and was the owner and operator of the 456MW Chaglla hydroelectric power generation plant and related assets, including all transmission lines to interconnect the plant to the Peruvian national grid. Its acquisition by Chaglla Holdings Limited effectively gave the CTG-led consortium (joint venture) ownership of the third-largest hydropower facility in Peru. EGH’s revenue is assured through 2031 thanks to a 15-year power purchase agreement (PPA) signed with state-owned Electroperú in 2011, which took effect in 2016. The PPA tender, in which only new hydroelectric projects could participate, fixed the energy price under a take-or-pay arrangement.