Innergex Renewable Energy Inc. (TSX: INE) and Energía Llaima, an innovative and growing renewable energy company located in Chile, are pleased to announce that they have been selected in a bid process to acquire in partnership the Duqueco hydro project (140 MW) which includes two hydro facilities in Chile. The acquisition is subject to certain regulatory approvals in Chile and to reaching a final partnership agreement between the parties. In addition, Innergex has signed an exclusivity agreement with Energía Llaima for a joint venture partnership to acquire a 50% stake in the company. Final agreements should be reached in the coming weeks in respect to this venture.

“We are very pleased to finally enter the Chilean market through the acquisition of hydro assets where we can leverage our substantial experience and expertise. With this partnership, we intend to pursue a growth trajectory in this market and to expand our development platform throughout South America with a focus on high quality renewable energy projects,” said Michel Letellier, President and Chief Executive Officer of Innergex. “These transactions mark Innergex’s entry into South America through the building of a strong partnership with a solid company with expansion plans. Energía Llaima is a perfect fit for us as they share a similar approach to sustainable development, working with local communities and indigenous groups to ensure projects are socially acceptable and are deeply integrated in Chile’s business sector.”

“We are very pleased to welcome Innergex as a partner in Energía Llaima and in acquiring two strong hydro assets,” said Ian Nelson, Chief Executive Officer of Energía Llaima. “We are a growing company with high quality projects in operation as well as in development and we intend to become a larger player in the Chilean industry and throughout South America. We look forward to having Innergex’s vast experience and diversified expertise to help bring many of our exciting development opportunities online.”

Upon signing a final partnership agreement, Innergex would own 50% of Energía Llaima for a total commitment of US$110 million (C$140.5 million) to be invested in the next three years. In addition to the investment in the Duqueco project, Innergex will invest an additional US$10 million (C$12.8 million) in Energía Llaima to contribute to its working capital. With these investments, Innergex’s commitment would almost be reached.

Acquisition of the Duqueco hydro project

The expected acquisition of the Duqueco hydro project includes two hydro facilities commissioned in 2001, Peuchen (85 MW) and Mampil (55 MW), located on the Duqueco river, 60 km east of Los Angeles city, Chile. The Peuchen plant has a reservoir upstream with a 4-hour regulation at full capacity and up to 12-hour regulation at partial capacity, which also benefits Mampil. The aggregated average annual power generation is expected to reach over 350,000 MWh. Electricity produced by these hydro facilities is sold under power purchase agreements (PPAs) at fixed prices until 2020 and on the spot market. Innergex is expecting an Adjusted EBITDA of approximately US$21 million (C$26.8 million) annually for the Duqueco project.

The purchase price, net of an estimated US$10 million (C$12.8 million) of cash, is approximately US$210 million (C$268 million), subject to certain adjustments and a financing of US$140 million (C$178.8 million) is to be granted by a leading South America bank, Itaú, to cover a portion of the purchase price. Innergex’s net share of the remaining purchase price will amount to about US$80 million (C$102.2 million). In addition, the Corporation made a deposit to secure financing of US$10 million (C$12.8 million). Both amounts will be paid through available funds under its corporate revolving credit facility.

About Innergex Renewable Energy Inc.

The Corporation develops, acquires, owns and operates run-of-river hydroelectric facilities, wind farms, solar photovoltaic farms and geothermal power generation plants. As a global player in the renewable energy sector, Innergex conducts operations in Canada, the United States, France and Iceland. Innergex manages a large portfolio of assets currently consisting of interests in 64 operating facilities with an aggregate net installed capacity of 1,642 MW (gross 2,886 MW), including 34 hydroelectric facilities, 25 wind farms, three solar farms and two geothermal facilities. Innergex also holds interests in two projects under development with a net installed capacity of 355 MW (gross 360 MW) one of which is currently under construction and prospective projects at different stages of development with an aggregate net capacity totalling 8,180 MW (gross 8,850 MW). Innergex Renewable Energy Inc. is rated BBB- by S&P. The Corporation’s strategy for building shareholder value is to develop or acquire high-quality facilities that generate sustainable cash flows and provide an attractive risk-adjusted return on invested capital and to distribute a stable dividend.
 

About Energía Llaima

Energia Llaima’s operational facilities include a 12 MW run-of-river hydro facility located in the San José de Maipo district in the Metropolitan Region. This facility produces an average of 75,000 MWh sold through various PPA’s and on the spot market. Energia Llaima has a majority interest in a 34 MW solar thermal facility in the Sierra Gorda district in the Atacama Region. This innovative facility, the second largest in the world, supplies approximately 54,000 MWh of heat energy to a large mining company which uses the energy in their electro-winning process. Energia Llaima’s development portfolio includes two run-of-river hydro projects in advanced stage of development, the 109 MW Central Frontera and the 16 MW Central El Canelo, as well as other early development stage projects.