The company signs an agreement of intent with Mexico Infrastructure Partners valued at about 5.5 billion euros to divest 80% of its generation business.
Iberdrola has announced the sale of 80% of its generation assets in Mexico for 6,000 million dollars -about 5,479 million euros-. The group has communicated this Tuesday to the National Securities Market Commission (CNMV) that the subsidiaries Iberdrola Generación México and Iberdrola Renovables México have signed an agreement of intent with the Mexican state-owned company Mexico Infrastructure Partners (MIP) for a private trust managed by MIP to acquire all the capital of several companies that own generation plants. The total installed capacity subject to the transaction is 8,539 megawatts (MW), of which 8,436 are gas-fired combined cycle plants and 103 are an onshore wind farm.
The assets that are part of the transaction are the combined gas cycles Monterrey I and II, Altamira III and IV, Altamira V, Escobedo, La Laguna, Tamazunchale I, Baja California and Topolobampo II and III, as well as the onshore wind farm La Venta III. All of them operate under the Independent Power Producer regime contracted with the Federal Electricity Commission. Also included are the Monterrey III and IV, Tamazunchale II and Enertek private gas combined cycle plants. With this operation, the group is left with only 2,427 MW of the almost 11,000 MW it had in the country. Of these, 1,166 MW correspond to combined cycle plants, 202 MW to cogeneration and 1,059 MW to renewables.
The agreed valuation for the sale of these assets (“in terms of company value or enterprise value, free of cash and debt, of the companies owning the assets”, states the statement sent to the CNMV) amounts to nearly 6,000 million US dollars. This amount, the group notes, could be modified depending on the closing date of the transaction and other “possible adjustments usual in this type of agreements”.
The divestment announcement comes shortly after Mexican President Andrés Manuel López Obrador bluntly criticized several Spanish companies operating in the country. “They abused our country and our people,” he said in mid-February in reference to Repsol, OHL and Iberdrola itself. Specifically, the U.S. president – author of several controversial statements towards Madrid in the past – accused the group led by Ignacio Sánchez Galán of lobbying to pressure against the electricity reform, one of the key measures of his government program. One of its objectives is to strengthen the public sector in the face of private investors.
Approvals
The transaction is subject to the agreement and signing of the definitive contracts by the parties, as well as to obtaining the necessary regulatory approvals and the fulfillment of certain conditions that are customary in this type of agreement. The company has stated that the transaction has the financial backing of the Mexican National Infrastructure Fund (FONADIN) and other public financial entities linked to the Mexican government.
Iberdrola México, the group has assured in the note sent to the CNMV, will continue to provide service to its current customers in that country and, temporarily, to the companies included in the perimeter of the transaction, for which it plans to enter into power purchase agreements with the firms being transferred in order to provide Iberdrola Group companies with the energy and power needed to develop renewable generation in Mexico and meet their current and future objectives in the country.