In J’ca: JPS Owner Reports J$11b Debt Financing To Fund Acquisition

4 November 2011

Details surface on the acquistion of  Jamaica’s power provider. GOJ’s holdings stand at 20%.

The Korean partners in the Jamaica Public Service Company (JPS) recently secured a US$135-million (J$11.5 billion) debt guarantee to finance its partial acquisition of the local power provider, according to its latest quarterly financial report.

It’s the first time that Korea East-West Power Company (EWP) has released any information on the acquisition of its 40 per cent stake in JPS.

EWP formed a holding company in Barbados to execute the acquisition from Japan-based Marubeni. The cost of the JPS acquisition was not disclosed.

“Korea East-West Power established EWP Barbados SRL in July 2011 for the purpose of acquisition of JPS shares. EWP Barbados SRL financed part of total acquisition costs through long-term¬†loan. The company provides debt guarantee of US$135 million to SMBC (Sumitomo Mitsui Banking Corporation) in relation to above financing,” EWP said in its June quarter financials released two weeks ago to shareholders.

It’s not known what portion of the purchase cost the debt guarantee represented, however, a 40 per cent equity stake in JPS would be valued at US$158 million (J$13.5 billion) based on its total equity of US$395.7 million (J$33.8 billion), according to the Jamaican utility’s 2010 annual report.

Mailed queries to both JPS and EWP were unanswered.

EWP made US$19.2 million (21.38 billion won) profit over three months ending June 2011, which reversed the loss made a year earlier at US$35.4 million (39.2 billion won).

In April, EWP bought the stake in Marubeni Caribbean operations, formerly held by Abu Dhabi-based TAQA, which made a US$7.6-million (J$652 million) profit on the sale of its energy assets in Jamaica and the Caribbean.

Marubeni and EWP each own 40 per cent of the company, the Government of Jamaica owns 19.9 per cent, while 3,000 shareholders own the remaining 0.1 per cent of the shares.

EWP is Korea’s largest thermal power-generation firm in sales volume and installed capacity, and owns and operates more than 9,500 megawatts of power-generation facilities in Korea.

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