ContourGlobal to acquire Mexican power plants from Alpek for $724m
Source - SMW
ContourGlobal said it had agreed to acquire Alpek's portfolio of two natural gas-fired combined heat and power plants in Mexico, and the development rights and permits for a third plant, for $724m in cash.
An additional payment at closing estimated at $77m represented the value added tax assessed for the transaction and was expected to be refunded in full within 12 months of closing, ContourGlobal said.
The two plants to be acquired would provide electricity and steam under long-term contracts to subsidiaries of Alfa Group, a Mexican industrial conglomerate, and other commercial and industrial customers.
The plants, located on sites adjacent to, and interconnected with Alpek's industrial facilities, had a gross installed capacity of 518 megawatts. The third adjacent plant had a planned capacity of 414 megawatts.
The assets would provide multiple products of value for the company's industrial partners, including electricity, heat, steam, chilled water and in several facilities, the capture of carbon dioxide.
The assets were expected to generate US dollar earnings with 'high quality, blue-chip clients' with an expected earnings (EBITDA) contribution of $110m in their first full year of operations, the company said.
The transaction would require the approval of ContourGlobal's shareholders.
'This accretive transaction fits squarely into our strategic and financial approach to acquisitions,' chief executive Joseph C. Brandt said.
'It was highlighted during our IPO and reflects our commitment to pursue high quality growth through operationally led strategic acquisitions and to double adjusted EBITDA without issuing new equity within five years of our listing.
'We are closer to achieving this objective with this acquisition, which we expect to add approximately $110 million to our adjusted EBITDA in the first full year of operations.'