Israel Corp unit raises $534m for Peru energy project

The Cerro del Águila is a 510-megawatt hydroelectric project in central Peru.

Israel Corporation (TASE: ILCO) Peruvian unit Cerro del Águila SA has secured $534 million in financing for its hydroelectric project in central Peru, which will cost an estimated $900 million to build. Israel Corp. has raised $830 million for the project to date, and has spent $102 million on it as of the end of July.

A syndicate of 11 banks provided the 12-year loan, which bears an average interest rate of LIBOR + 5% a year. The first drawing on the credit line is subject to certain conditions.

Cerro del Águila is one of three Peruvian companies partly held by Israel Corp. wholly-owned subsidiary IC Power Ltd. through its international arm Inkia Energy Inc. The other two companies are Kallpa Generación SA and Edegel SAA.

Israel Corp. has provided a $65 million guarantee for the loan, and promised that it will not reduce its stake in Inkia to below 50.1% from its current 100%. The guarantee is valid through 2016, when the Cerro del Águila project is due to come on line. Inkia Energy owns 74.9% of Cerro del Águila, and Inkia's partner in the company is due to provide a corresponding proportionate guarantee.

Italy's Astaldi SpA (BIT: ASP) and Peru's Grana y Montero SAA (Lima: GRM) are building the 510-megawatt Cerro del Águila hydroelectric power station, under a $680 million contract with IC Power.

Published by Globes [online], Israel business news - www.globes-online.com - on August 19, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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