Linklaters advises on the US$800 million Acquisition Financing On Mozambique Power Station

LAWFUEL – Law Firm Newswire – Linklaters has advised Banco BPI, SA and Calyon as Mandated Lead Arrangers on the US$800 million financing of the acquisition by the Government of Mozambique from the Government of Portugal of a majority stake in the 2075MW Cahora Bassa hydroelectric power station in Mozambique (“HCB”). Development Bank of Southern Africa (“DBSA”) was sub-underwriter.

The power station, which was built prior to Mozambican independence from Portugal in 1975, supplies power to South Africa (Eskom), Mozambique (EdM) and Zimbabwe (ZESA). Since independence, HCB has been 82% owned by Portugal and 18% by Mozambique. In 2006, the two states agreed that Portugal would sell part of its interest in HCB for a purchase price of US$700 million in order to raise Mozambique’s stake to 85% with Portugal retaining 15%.

The 10 year financing was structured as a prepayment facility secured by the power station’s offtake arrangements, the dominant one of which is with Eskom. This is the first major international financing involving Mozambique to be arranged by commercial banks without political risk cover.

The Linklaters team was led by partners Andrew Jones in London and Pedro Siza Vieira in Lisbon and comprised English and Portuguese energy and infrastructure finance lawyers as well as structured trade finance experts taken from the firm’s London and Lisbon offices.

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