S&C Advises China Three Gorges-Led Consortium in $1.39 Billion Purchase of Chaglla Hydroelectric Plant in Peru

May 10, 2019

A consortium led by China Three Gorges (CTG), a Chinese state-owned power company, completed its $1.39 billion acquisition of Empresa de Generación Huallaga S.A. on April 25. Formerly a subsidiary of Brazilian construction multinational Odebrecht SA, EGH was responsible for developing Peru's Chaglla hydroelectric power plant. Because EGH owns the permanent concession of the Chaglla plant, the deal effectively gives the CTG-led consortium ownership of the plant, which is the third-largest hydropower facility in Peru. To finance the purchase, Bank of China Limited, Luxembourg Branch, amongst others, provided the consortium with an $850 million two-year bridge loan and letter of credit facility.
The S&C team advising the CTG-led consortium on this deal was led by corporate partners Sergio Galvis and Werner Ahlers in New York, as well as Chun Wei in Hong Kong. Partners Jamie Logie, Garth Bray and Kay Ian Ng in Hong Kong advised on financing matters, including securing the bridge loan and credit facility.
This acquisition is China Three Gorges' first purchase in Peru, as the presence of Chinese energy companies continues to grow in Latin America. The Chaglla plant's installed capacity of 456,000 kilowatts accounts for approximately five percent of the total energy generated in Peru. The plant's location in the country's northern Andean mountain region makes it a critical supply of power for Peru's mining industry.