Trading Statement

RNS Number : 7455R

Rurelec PLC

16 September 2014

 



16 September 2014                                                  

Rurelec PLC

("Rurelec" or "the Company")

Trading Update

The Directors of Rurelec PLC (AIM: RUR), the owner, operator and developer of power generation capacity internationally, are pleased to announce that the Company's projects are progressing well and to provide the following update:

Chile

Rurelec's Termonor subsidiary has given notice to the relevant authorities in Chile for the start of works on its Parinacota project in Arica and expects to start preliminary works in mid-October.   

Rurelec is considering offers for a 50 per cent stake in Termonor and expects to complete a sale at a premium to book value.  In the meantime the debt required to complete the plant is expected to be secured early in 2015 and the equity of the Parinacota project has been fully paid up by Rurelec.

Rurelec is also considering offers for 50 per cent of its Central Illapa project, where it also expects to complete a sale at a premium to book value.  Rurelec intends to complete financing and commence construction early in 2015, subject to finalising arrangements with a partner. 

Pending the completion of the sale of the share stakes in the Parinacota and Illapa projects, Rurelec has put on hold the planned trading in its shares on the Santiago Stock Exchange.

Peru

Rurelec's Peruvian run of river hydro subsidiary, Cascade Hydro, has completed construction of its Canchayllo project, which is expected to enter service at the end of this month.   Its successful construction is a milestone for Rurelec since it constitutes both the first hydro development to be built by Rurelec as well as the first new generation capacity following the May 2010 nationalisation of Rurelec's Bolivian assets.

Cascade Hydro has agreed terms for the sale of a substantial share stake in the Canchayllo project which will allow Cascade to repay third party loans and release funds to Rurelec.  Completion of that share sale is expected to occur in early October.  Cascade has identified more opportunities to build up its small hydro development portfolio up to 200 MW over the next five years. 

Rurelec is currently negotiating partnership arrangements covering both small hydro and large hydros in Peru.  This is significant since Rurelec has recently been informed by the government of Peru that the long anticipated Proinversion tender process for large hydro power purchase agreements (PPAs) will finally be announced at the start

of October.  Rurelec owns the 255 MW run-of-river Santa Rita project in Ancash Province which is expected to be one of the leading contenders for a large hydro PPA.

Argentina

The Energia del Sur (EdS) plant in Comodoro Rivadavia continues to trade at record levels and is reported to be the highest availability plant in Argentina.  The strong cash flow from EdS has permitted the continued monthly repayment to Rurelec London of its outstanding US dollar denominated project loans in spite of the continuing excitement in international markets over Argentina's negotiations with the debt "hold-out" hedge funds.

Major Alliances

Rurelec is exploring one or more major alliances in Latin America to allow the Company to accelerate its growth without the need to ask existing shareholders for further capital.  This is part of a wider Rurelec strategy to return to paying dividends.  That strategy can only be achieved when Rurelec has more operating power plants under ownership or management. By teaming up with large, regional players in Latin America, the Company expects to be able to trade off its Independent Power Corporation subsidiary's nineteen year track record in developing, constructing and operating gas fired combined cycle power plants for equity stakes in thermal projects funded by larger partners wishing to switch to gas fired capacity.

Commenting on the trading update, Peter Earl, CEO of Rurelec said:

"With the Bolivian settlement behind us, we are now looking to a future where we return to a growth trajectory with new partners.  We have a strong platform of projects and we have a presence in the key markets of Latin America which are increasingly attractive to investors. Our recent share price performance significantly undersells the value of what we have put together in recent years. "

For further information please log onto our website at www.rurelec.com or contact:

Peter Earl, CEO, Rurelec PLC Ana Ribeiro, Head of Communications	Tel: [phone]
Paul Shackleton & David Hart Daniel Stewart & Company Plc	Tel: [phone]
James Joyce and James Bavister W.H. Ireland	Tel: [phone]

 

END

 

 

TSTGGUBPBUPCGBA