Energias de Portugal reduces debt by selling assets to China Three Gorges

7 March 2016

The EDP Group will continue this year with an asset sale policy, specifically to its main shareholder, China Three Gorges (CTG) in order to reduce its level of debt, said the group’s chairman.

EDP will raise almost 392 million euros with the sale of 49 percent of operations in Poland and Italy to CTG, but the disposal of assets in 2016 will amount to 500 million euros in total, the chairman of EDP, António Mexia, told Portuguese weekly newspaper Expresso.

EDP Renewables Europe, through the ACE Investment Fund LP, held the entire share capital of ACE Poland and ACE Italy, which together hold a portfolio of wind assets of nearly 600 megawatts.

This revenue and other businesses that are expected to increase the sale of assets to 500 million euros will allow the group to reduce debt to 16.5 billion euros at the end of the year, about 900 million less than last year.

This year, EDP will have to repay debt totalling 3 billion euros and another 1.7 billion euros in 2017. The group has said it is in a comfortable position to do so, thanks to a liquidity level of almost 5.4 billion euros.

But the group’s debt is still considered high, with interest paid totalling 892 million euros, equivalent to 23 percent of EBITDA, according to the figures announced this week by the company at the annual results presentation.

Overall, the group’s results improved due to EDP Renováveis and EDP Brasil, but profit fell 12 percent in 2015 to 913 million euros.

When it was awarded the privatisation of 21.35 percent of the Portuguese State’s stake in EDP, in December 2011, for which it paid 2.69 billion euros, CTG pledged to invest 2 billion euros in EDP renewable energy projects.

The assets initially sold to CTG are located in Portugal and Brazil, after Spain had ceased to be a priority following regulatory changes in the country.

EDP Renováveis, now 49 percent owned by a subsidiary of CTG, CWEI (Hong Kong), is present in 11 countries and is considered the world’s third largest renewables company.

In Africa, the group has pointed to joint investment of US$2 billion by 2020, focusing mainly on the dams that CTG will help build.

In January the CTG group signed contracts with the Brazilian Ministry of Mines and Energy for the concessions on two hydroelectric plants in the country – Jupiá and Ilha Solteira – following an auction in which it paid 13.8 billion reais (US$3.66 billion) to get the award.

Recently, the vice president of CTG group, Lin ChuXue said in Beijing that the Portuguese-speaking countries were a priority, given the goal of being a world leader in renewable energy. (macauhub/BR/CN/EN)