ContourGlobal plc, a London-based owner and operator of contracted wholesale power generation businesses, announced it has reached an agreement with Alpek S.A.B. de C.V, Grupo Alfa petrochemical subsidiary, to acquire its portfolio of two natural gas-fired combined heat and power (CHP) plants, together with development rights and permits for a third plant, for US$724 million in cash.

An additional payment at closing estimated at US$77 million represents the Value Added Tax (VAT) assessed for the transaction and is expected to be refunded in full within 12 months of closing. 

The portfolio being acquired consists of 932MW of potential capacity, located on Alpek's petrochemical sites in the Mexican states of Veracruz and Tamaulipas, of which 518MW will be operational by closing. 

The total portfolio comprises: 104MW of existing operational capacity; 414MW currently undergoing commissioning and scheduled to enter commercial operations within the first half of 2019; and development rights and permits for an additional adjacent 414MW plant.

One plant, located in Cosoleacaque, Veracruz, has a capacity of 104MW and entered into commercial operations in December 2014. It provides power and steam to the Alfa Group's adjacent petrochemical plants under 20-year contracts signed in 2014, with excess power output supplied to large industrial and commercial clients in Mexico, including with other Alpek affiliates, through medium and long-term power purchase agreements (PPAs).

The second plant, located in Altamira, Tamaulipas state has a projected capacity of 414MW, and was constructed under a turnkey EPC contract with a subsidiary of the Spanish industrial conglomerate, Grupo ACS. Construction commenced in 2016 and commissioning is currently underway with the expected entry into commercial operations in the first half of 2019. 

ContourGlobal's obligation to complete the acquisition is conditional upon the Altamira plant successfully completing its commissioning tests and entering into commercial operations. The facility is adjacent to a petrochemical plant owned by Alpek and will provide steam production and power output under a 20-year contract. 

Similar to the Cosoleacaque site, it sells the excess power output to a diversified portfolio of commercial and industrial clients, including to other Alpek affiliates, through medium and long-term PPAs.

“The transaction is in line with Alfa's strategy of creating value for its shareholders and reducing its financial leverage. In conjunction with the recent divestment of the mass market in Axtel, revenues from the sale of non-strategic assets exceed one billion dollars,” said Alvaro Fernandez Garza, general director of Alfa.

MexicoNow

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