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Acquisition of power generation equipme nt out of receivership
On-sale to Independent Power Corporation PLC ("IPC")
25th January 2005
Rurelec announces that yesterday it acquired for a purchase consideration of £1 million in cash nine Jenbacher 616 gas engines with a total nominal capacity of 18 MW (together with associated ABB generators and heat recovery systems) from Trevor O'Sullivan and Simon Bower acting as Receivers to Medina Finance Limited, a company in administrative receivership (the "Vendors").
£800,000 of the purchase consideration was paid to the Vendors yesterday from Rurelec's own resources. Payment of the balance, which has been guaranteed by IPC as part of the onward sale transaction described below, is due to be paid to the Vendors on 15th February 2005.
The Jenbacher is a high efficiency gas engine of 2 MW installed capacity which runs on natural gas. Rurelec intends to use three of the engines for a new rural electrification project in Tarija in southern Bolivia, where there are large reserves of natural gas, local demand for affordable power and where the possibility also exists of electricity supply to isolated power systems in Northern Argentina, which are currently experiencing acute shortages of electricity as demand growth increases.
Yesterday, Rurelec also entered into a contract to sell on to IPC the remaining six Jenbacher machines for £1 million, excluding VAT, in cash. This transaction is due to complete on 15th February 2005. No residual liability will remain with Rurelec following their sale. The sale of the six machines to IPC will give rise to a gross profit to Rurelec on the sale of approximately £333,000 and the carrying value of engines retained will also be approximately £333,000.
Rurelec's Managing Director Peter Earl, due to his holding of a controlling stake in IPC, is a related party as defined by the AIM Rules for the purposes of the sale by Rurelec of the six machines to IPC. The directors of Rurelec, with the exception of Peter Earl (the "Rurelec Directors"), consider, having consulted with Rurelec's nominated adviser Arbuthnot Securities Limited, that the sale of the six machines to IPC is fair and reasonable insofar as Rurelec's shareholders are concerned. In consulting with the Rurelec Directors, Arbuthnot has relied upon the Rurelec Directors' commercial assessments.
Rurelec also announces the appointment of Carlos Garcia Agreda as General Manager of its Bolivian isolated power subsidiary, Energia para Sistemas Aislados SA ("ESA"). Carlos Garcia is an electrical and mechanical engineer who spent six years at Cooperativa Rural de Electrificación ("CRE"), a distribution co-operative that serves Bolivia's Santa Cruz department and which is also Bolivia's largest rural electrification co-operative, before taking responsibility for rural electrification projects at Bolivia's Vice-Ministry of Electricity. ESA is currently working on the installation of 6 MW of Worthington reciprocating engines in Trinidad in Central Bolivia and on the development of a 10 MW isolated power project serving Yacuiba in southern Bolivia at a time when the provision of power for isolated generation has become an important political issue in Bolivia. ESA is in discussions, which may lead to new joint ventures with local partners in Bolivia and Argentina and with multi-lateral agencies for an accelerated roll-out of new power capacity in the Southern Cone of Latin America.
Elizabeth Shaw
Finance Director
For further information contact:
Elizabeth Shaw Tel: +44 (0)20 7793 7676
Rurelec PLC is a British company established to develop rural electrification projects in Latin America. It is managed by a team with a strong track record in developing power projects worldwide and with considerable experience in the electricity sector in Latin America.
Rurelec has two principal businesses:
-Ownership of power generation facilities in isolated areas
-Management of rural electrification expansion projects funded by the World Bank or multi-lateral development agencies.
Rurelec recently floated on the AIM market of the London Stock Exchange in order to have access to European institutional capital for new power projects and to ensure transparency for its public sector-funded project management activities.
Arbuthnot Securities Limited which is authorised by the Financial Services Authority is acting as nominated adviser to Rurelec and for no one else in connection with the transactions described h rein and will not be responsible to any person other than Rurelec for providing the protection afforded to its customers or for advising any other person in relation to the transactions described herein.
On-sale to Independent Power Corporation PLC ("IPC")