Endesa Chile agreed to pay US$50M to buy the 17.2% stake held by CMS Enterprises, which is a subsidiary of CMS Energy.
The acquisition takes the total of Endesa Chile's indirect and direct stakes in the Hidroelectrica El Chocon S.A. hydro business to a majority holding of 64.7%, the company said. The terms of the deal also included debt owed to CMA by Hidroinvest S.A., the Argentine holding company and controller of Central Hidroelectrica El Chocon S.A.
In divesting its equity in Argentine hydro, CMS has exited major ownership of hydro power in its production portfolio. Through the sale CMS has transferred its interests in the 1200MW El Chocon and the 120MW Arroyito power plants, both of which are owned by Central Hidroelectrica El Chocon S.A.
Much of the Argentine energy market operates on spot prices, which is where the El Chocon business gets most of its sales with its high dispatch rate from 1320MW generation assets and relatively low costs. The business has 20% long-term contracts and the assets were held persuant to a 30-year possession agreement.
The deal with Endesa Chile came after the Chilean company exercised its 'first offer' rights following CMS' announcement, early February, that it would sell the hydro stake along with other, non-utility gas assets to Lucid Energy. A binding letter of intent had been signed but the deal was subject to negotiation and execution of a definitive purchase-sale agreement. The change results in the value of the CMS deal with Lucid being reduced by the same amount - $50M - to $130M.
CMS has recently announced a raft of divestments, the proceeds of which will be used to reduce parent group debt and invest in CMS Energy's utility in Michigan state - Consumers Energy.
