Last checked at 2 Mar 2009 13:58
Rurelec PLC
("Rurelec" or "the Company")
Financing Update: Guaracachi Debt Rating and related party transaction
Guaracachi Debt Rating
Rurelec is pleased to announce that its 50.01 per cent. Bolivian subsidiary, Empresa Guaracachi SA ("Guaracachi"), has recently received an improved AA debt rating (equivalent to AA2 SPVS) from Latin American debt rating agency, Pacific Credit Rating, for its latest local US $24 million public bond issue for its 96 MW CCGT expansion project in Santa Cruz.
Contrary to recent press speculation, Guaracachi is not being compulsorily acquired by the Government of Bolivia. Guaracachi is Bolivia's largest power company and enjoys excellent government relations since it is the only power generator to have increased capacity in recent years adding new capacity every year since 2006. Guaracachi is exploring with the Government of Bolivia a new generation initiative in the mountainous west of the country and expects to consolidate new public-private finance initiatives during the first half of 2009.
Financing
Rurelec is a development company and, like all development companies, it relies on the availability of external financing, principally through the debt markets, to finance the expansion of its business and to refinance its investments as its businesses move from the construction phase to commercial operations. Whilst funds have recently been successfully raised in Bolivia to finance the combined cycle project for Guaracachi, the current commercial bank lending climate in both Argentina and Europe is making the job of the Directors far harder than in previous years, especially since the end of the first half of the Company's financial year.
In the absence of bank lending the Company received five loans totalling approximately £4.4 million in August 2008 and September 2008 from Independent Power Corporation PLC ("IPC"), a company controlled by Peter Earl (Managing Director), of which Jimmy West (Non-Executive Director of Rurelec) is Chairman and Elizabeth Shaw (Finance Director) is also a director. The loans are payable on demand, and are on commercial terms. Four of the loans are denominated in US dollars and one in Sterling.
Under the AIM Rules, these loans are classified as a related party transaction. The independent directors consider, having consulted with Daniel Stewart (the Company's nominated adviser), that the terms of loans are fair and reasonable insofar as Rurelec's shareholders are concerned.
For further information, please contact:
Peter EarlManaging Director Tel. 020 7793 5610
Paul Shackleton / Stewart DickDaniel Stewart & Company Tel. 020 7776 6578