As part of the transaction, ContourGlobal will be acquiring the 104MW CELCSA power plant in Cosoleacaque, Veracruz state and the 414MW CGA1 power plant in Altamira, Tamaulipas state.
Both the facilities are natural gas-fired combined heat and power (CHP) plants, which will deliver electricity and steam under long-term contracts with subsidiaries of Mexican industrial conglomerate Alfa along with other commercial and industrial customers.
The transaction will also see the UK firm acquire development rights and permits for a third power plant with a capacity of 414MW to be built near the CGA1 plant.
ContourGlobal president and CEO Joseph Brandt said: “This accretive transaction fits squarely into our strategic and financial approach to acquisitions. It was highlighted during our IPO and reflects our commitment to pursue high quality growth through operationally led strategic acquisitions and to double adjusted EBITDA without issuing new equity within five years of our listing.
“We are closer to achieving this objective with this acquisition, which we expect to add approximately $110 million to our adjusted EBITDA in the first full year of operations.”
The CELCSA power plant, which has been in operations since December 2014, provides power and steam to the nearby petrochemical plants of Alfa Group under 20-year contracts. Excess power output from the plant is provided to large industrial and commercial clients in Mexico.
The CGA1 is in the commissioning phase and is slated to enter commercial operations during the first half of this year.
ContourGlobal said that its obligation to complete the acquisition is based upon CGA1’s successful completion of its commissioning tests and entering into commercial operations.
The CGA1 power plant has been built near an Alpek-owned petrochemical plant. Under a 20-year contract, CGA1 will supply steam production and power output.
The deal is subject to corporate approvals and authorization by the Comision Federal de Competencia Economica in Mexico among other customary closing terms and conditions.
The transaction amount includes an additional payment to be made at closing, which is estimated at $77m. This amount represents the Value Added Tax (VAT) assessed for the deal and is expected to be fully refunded within 12 months of closing.
