GDF-Suez set to complete Econergy acquisition

28 October 2008


The takeover of the UK-listed company was priced at approximately £39.2M (US$61.5M) on an all-cash basis and which represented a premium of 43.1% over the company valuation, Suez said. In June, when Suez made its binding offer for the US firm, the dollar equivalent was then approximately US$78M.

GDF-Suez said that its offer has gained acceptances of almost more than 97% of Econergy's existing issued ordinary share capital, plus other regulatory approvals, which enabled it to be able to close the acquisition. It said, though, that the offer would remain open. The offer was made via Suez Energy South America Participacoes.

The acquisition deal also includes loan facilities of more than US$50M being made available to Econergy.

Econergy was established in 1994 but within the last year it began looking for a buyer or merger. The independent power producer (IPP) had been exploring strategic options to boost its capitalisation in the weakening credit markets, and rejected an offer from Trading Emissions in April before looking positively at the approach from Suez.

The strategic move came despite higher revenues last year, mostly from the 147MW Corani hydro power plant in Bolivia, and reduced costs. In January, the firm posted gross revenues of US$21.6M for 2007. Earnings (Ebitda) were US$14.2M.

Econergy has various projects in development, such as the 19.8MW Areia Branca hydro plant in Brazil, in which it part-sold its stake earlier this year but still holds majority control. At the beginning of the year funding for two-thirds of the project was secured from the Brazilian development bank (BNDES).

In addition to hydr opower, the company is also active in carbon credit markets and renewables consultancy. It also has some wind and coalbed methane projects. In total, it has a portfolio of 266MW and approximately 200MW of projects in various stages of development.

GDF-Suez said that the acquisition would not only strengthen its renewables position in small hydro and wind power but that it would contribute to know-how on carbon credits and non-conventional renewables.




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