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CTG Brasil completes acquisition of three Triunfo companies

CTG Brasil has completed the acquisition of three companies from Triunfo Participações e Investimentos (TPI), two hydroelectric plants in Rio Canoas (Santa Catarina) and Rio Verde (Goiás), as well as the energy trading company TNE (Triunfo Negócios de Energia, based in Curitiba).
Under the transaction CTG Brasil is paying R$ 966,7 million upon closing, in addition to the assumption of net debt of the three companies, which on September 30, 2015 stood at R$ 758,1 million, representing a total of R$ 1,72 billion. There are potential additional payments to be made, subject to the achievement of certain events that will benefit both CTG Brasil and TPI. This acquisition is another important step in CTG Brasil’s plans to become a relevant player in Brazil’s clean energy market.
This transaction is in line with CTG Brasil´s strategy of strengthening its footprint in the country through acquisitions and greenfield developments. Brazil is a priority market for CTG due to its vast hydropower capacity and potential for construction and operation of large-scale plants. CTG Brasil wants to be a relevant clean energy company in the country and aims to invest in renewable energy sources with a lower impact on global warming. CTG Brasil’s portfolio has a net installed capacity of 1.0GW, including the assets acquired from TPI.
“We are very pleased to have completed this acquisition,” commented Li Yinsheng, CEO of CTG Brasil. “This acquisition, as well as our successful bid for Jupiá and Ilha Solteira hydroelectric power plants on November 25th, are clear demonstrations of our intention to invest and grow in Brazil, which is a key market for CTG’s international expansion strategy.”
On November 25th, CTG Brasil successfully bid for Jupiá and Ilha Solteira hydroelectric powerplants for R$ 13.8 billion in the auction organized by the Brazilian government. The company bid R$2.38 billion without a discount over the Annual Revenues (“RAG”) for the 70% contracted on the Regulated Market.

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CTG Brasil successfully bids for Jupiá and Ilha Solteira hydroelectric plants in auction

CTG Brasil has successfully bid for Jupiá and Ilha Solteira hydroelectric power (“HPP”) plants for R$ 13.8 Bn in the auction organized by the Brazilian government, which  included 27 HPPs whose concessions were not renewed after the implementation of Provisional Measure nº 579 (“Auction”). CTG bid R$2.38 Bn without a discount over the Annual Revenues (“RAG”) for the 70% contracted on the Regulated Market.

Located in Paraná River on the border between the States of São Paulo and Mato Grosso do Sul, the HPPs for which CTG Brasil successfully bid have total installed capacity of approximately 5 GW. These assets were built and formerly operated by CESP, a Brazilian utility company that operates power assets mainly in the state of São Paulo.

The auction was the first in Brazil featuring an award payment (Total R$17 Bn), since Brazil implemented a new model for the power sector in 2004. The new model allows generation companies to sell 30% of the energy they produce on the free market. The 70% commercialized on the regulated market was sold under a Quota System without any hydrologic exposure.

The acquisition is another important step in CTG Brasil’s plans to become a relevant player in Brazil’s clean energy market. It comes after the recently-announced acquisition of three assets of Triunfo Participações e Investimentos (TPI), two hydroelectric plants in Rio Canoas (Santa Catarina) and Rio Verde (Goiás), as well as energy distribution company TNE (Triunfo Negócios de Energia, based in Curitiba). That transaction is still pending final closing, and today’s acquisitions are still subject to regulatory approval.

CTG’s recent transactions in Brazil are in line with its strategy of strengthening its footprint in the country through acquisitions or Greenfield development. Brazil is a priority market for CTG due to its vast hydropower capacity and potential for construction and operation of large-scale plants. CTG Brasil aims to invest in renewable energy sources with a lower impact on global warming.

“We are very pleased that our bids for Jupiá and Ilha Solteira were successful,” commented Li Yinsheng, CEO of CTG Brasil. “These acquisitions are a clear and tangible demonstration of our intention to invest and grow in Brazil, which is a key market for CTG’s international expansion strategy. Our experience in building and operating large-scale plants should allow us to achieve our aim of being a relevant player in Brazil’s clean energy sector and making a significant contribution to the Brazilian power sector.”

Combined with Triunfo’s assets, CTG Brasil’s installed capacity will reach 6GW, making it the second largest private generation company in Brazil.

 

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CTG Brasil acquires companies from TPI

China Three Gorges Brasil Energia (CTG Brasil) signed, with Triunfo Participações e Investimentos, a contract for the purchase of interest in Rio Verde Energia, Rio Canoas Energia and Triunfo Negócios de Energia subsidiaries. The amount to be paid by CTG Brasil was divided into three parts: R$ 970 million at closing, R$ 770.4 million in assumed debts, and the potential payment of R$ 148.5 million conditioned upon the achievement of certain events.

Rio Verde Energia is responsible for operating Salto hydroelectric plant (116MW) located in Rio Verde basin, Goiás. Rio Canoas Energia manages the hydroelectric power plant of Garibaldi (192MW), in Santa Catarina, and Triunfo Negócios de Energia is responsible for the commercialization of this energy produced.

With its own installed capacity of 687 MW, CTG will grow to about 1,000 MW.

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CTG Brasil changes its name

As part of its brand strategy, CTG Brasil completed the change of its corporate name to “CWEI (Brasil) Participações Ltda.” to “China Three Gorges Brazil Energia Ltda.”.

The change was registered through the 7th Amendment of Articles of Association by the Board of Trade and the IRS – CNPJ. There were no changes in other registration details of the company.

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CTG Brasil acquires 49% of EDP Renováveis

The Administrative Council for Economic Defense (CADE) approved the acquisition of 49% of the wind farms in operation and under development in Brazil for EDP Renováveis ​​Brasil, by CWEI (Brasil) Participações, a subsidiary of China Three Gorges Corporation (CTG Brasil).

The purchase includes 11 companies of EDP Renováveis ​​Brasil, which currently operates 84 MW of wind power and has parks in development with long-term contracts awarded through auctions from 2011 and 2013.

In order to obtain a proper participation, CTG Brasil expects to invest approximately R$ 364.8 million, including estimated capital contributions of R$ 100.8 million in projects under development.

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Part of EDP dams are acquired by CTG Brasil

Energias do Brasil, a subsidiary of the EDP-Energias de Portugal, sold half of its stake of 66.67% for São Manoel hydroelectric to CTG Brasil, the subsidiary of China Three Gorges Corporation (CTG Brasil).

The plant will have an installed capacity of 700 MW and will be built on the border between Mato Grosso and Pará, in the Teles Pires River.

Thus, the CTG Brasil joins EDP Brasil and Furnas as a shareholder of São Manoel, becoming one of the three companies with approximately 33.3% interest.

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CTG Brasil collaborates with the EDP in the construction of São Manoel hydroelectric

EDP ​​Brasil and CTG Brasil, a subsidiary of China Three Gorges Corporation (CTG Brasil), signed the Purchase Agreement and 33.3% stake sale in the company that owns the hydroelectric development rights of São Manoel.

CTG Brasil will repay the project costs and will assume the commitment to make capital contributions until the end of its construction, even assuming the risks and benefits of the project in proportion to the interest acquired.

The financing of construction provides for the use of long-term funds, estimated advantage up to 66% of the investment of R$ 2.7 billion.

This investment was considered for the fulfillment of the Strategic Partnership Agreement between EDP and CTG Brasil in relation to the total investment of € 2 billion, which will be carried out by CTG Brasil(including the financing for operational investments) in operational renewable energy production projects and prompt to be built.

 

 

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Development of strategic partnership between the EDP and CTG Brasil

The CTG Brasil Group signed with the EDP Group a set of agreements, continuing the strategic partnership agreement established in December 2011, which entered into force in May 2012.

A Memorandum of Understanding established the main directions of partnership to future investments between EDP Brazil and CTG Brasil and governs the participation of the parties involved in joint projects in Brazil.

The partnership provides that the CTG Brasil  will:

– Acquire a 50% stake in the in the company holding the development rights for the Caldeirão waterfall central (219 MW), in an estimated value of R$ 294 million over the construction period;

– Acquire a 50% stake in the company holding the development rights for the Jari hydroelectric plant project (373 MW), for a value of R$ 490 million, assuming a set future investment estimated in R$ 81 million during the construction period for the project.

These operations represented a significant progress for the Strategic Partnership, to provide visibility to the € 1,000 million target, in investments from CTG Brasil, by the end of 2013, including businesses related to the EDP Renováveis ​​Portugal, SA.