Uruguay’s Power Utility Seeks $64 Million for Wind Farms

Uruguay’s state-run electric utility UTE is preparing two wind-energy projects that together may raise at least $64 million in equity on the local capital market, according to chairman Gonzalo Casaravilla.

The Colonia Arias and Valentines wind farms require as much as $300 million of financing, including both debt and equity, Casarvilla said in an interview Friday from UTE’s headquarters in Montevideo. Exactly how those funds will be split hasn’t been decided yet, he said.

Project managers have sought central bank approval to issue shares in the projects, said Casaravilla, who’s optimistic they will go to market “soon.” Colonia Arias will be held through a financial trust. A company known as Sociedad Anonima will hold Valentines and plans to sell shares to the public.

UTE, formally known as Administracion Nacional de Usinas & Trasmisiones Electricas, intends to replicate the success of the wind energy trust Fideicomiso Financiera Pampa.

In March, Pampa sold $77.6 million in shares to build Uruguay’s largest wind farm. Demand from institutional investors such as local pension funds was almost six times oversubscribed at $368.9 million, and demand for $15 million in shares for retail investors exceeded $100 million. UTE contributed $19 million in equity to Pampa.

IDB Loans

The Colonia Arias and Valentines wind farms require investments of about $150 million each. The Inter-American Development Bank has agreed to lend as much as $110 million to each project, with equity contributions from UTE and private investors accounting for the balance of the funding, Casaravilla said.

When completed, each wind farm will each have 70 megawatts of installed generation capacity. The electricity they produce will be sold to UTE under a long term contract.

Colonia Arias will be structured as a trust similar to Pampa, while Valentines will be financed through the sale of shares in a company created specifically for the project, Areaflin SA, Casaravilla said.

UTE will contribute 20 percent of the equity in each project. The share offerings for private investors may be tailored exclusively for the retail market, he said.

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