Bank of China participates in $850 million syndicated bridge loan to facilitate acquisition of 456MW Chaglla hydroelectric power generation plant (Linked to Project ID#96415)

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 Luxembourg, and BBVA Banco Continental del Perú. Bank of China's contribution to the syndicate is captured via Project ID#89647. 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. 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. The hydropower facility itself is located along the Huagalla river in the Chaglla and Chinchao districts of Peru. EGH's 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.

Additional details

1. EGH was acquired through Huallaga Holding Company Limited, a company created by the consortium and organized under the laws of the Hong Kong Special Administrative Region and the People’s Republic of China. 2. The individual contributions of Bank of China and ICBC to the loan syndicate are unknown. For the time being, AidData assumes equal contributions to the $850 million loan ($283,333,333) across the 3 participants in the loan syndicate.

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