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Seven firms advise on South American hydro divestment

Seven firms advise on South American hydro divestment

King & Wood Mallesons and Freehills have worked with five offshore firms to advise on the disposal of an interest in the Energía Austral hydroelectric development company.

Firms: King & Wood Mallesons, Toronto-based firm McCarthy Tétrault, Santiago-based firm Cariola, and Bermuda-based firm Abbleby (Xstrata Copper); Freehills, Santiago-based firm Carey, and Bermuda-based firm Conyer (Origin)

Deal: Xstrata disposal of an interest in the Energía Austral hydroelectric development company to Origin Energy

Area: Energy and resources

Value: Origin Energy will progressively invest up to US$75 million in project-development costs for the completion of a detailed project feasibility study, and, if the project is deemed viable, an additional $US75 million towards a final investment decision in 2015/2016

Key players: The KWM team was led by partner Stefan Luke (pictured) who was supported by solicitor Michaela Moore. Partner Scott Gardiner also advised on some of the structuring aspects of the transaction.

Deal significance: Energía Austral is a Chilean geothermal exploration company which holds a number of significant electricity generation projects. Its facilities, situated in the Aysén region of southern Chile, are comprised of three hydroelectric plants. Once complete, the facilities will deliver clean energy throughout Chile through a new transmission system that will connect with Chile’s central interconnection grid.
At full capacity, Eneriga Austral’s hydropower supply will avoid the generation of three million tonnes of carbon dioxide per year as compared with fossil fuel energy generation. The transaction involved Origin Energy acquiring a majority interest in the Energía Austral project, while Xstrata Copper will maintain a 49 per cent interest in the project.
“This deal illustrates the increasing interest in markets like Chile where high energy demand and the region’s significant resources potential is attracting considerable interest and foreign investment,” said KWM’s Luke.

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