30th May 2014 06:52
LONDON (Alliance News) - Rurelec PLC Friday said it has signed a final agreement with the government of Bolivia which releases an immediate payment of USD31.5 million to the company, ending a four-year compensation battle over Empresa Guaracachi SA.
The power generation company said the agreement, which represents full and final settlement of the liabilities to Rurelec, was signed by Bolivian Minister of Hydrocarbons and Energy Juan Jose Sosa.
The two sides agreed earlier in May that Bolivia would pay Rurelec USD31.5 million as settlement after Rurelec spent four years fighting to get compensation after the country's government nationalised its 50.001% stake in subsidiary Empresa Guaracachi, the largest power producer in the country, by force in 2010.
Rurelec agreed to waive some of the company's full entitlement in return for a fast payment, which it had initially expected in early May.
In February of this year, the Permanent Court of Arbitration in The Hague granted immediate compensation of USD35.5 million to Rurelec. A further USD5.5 million was due to be paid back to Rurelec by Empresa Guaracachi itself in the form of declared but unpaid dividends going back to the time before nationalisation, taking the total payments due to Rurelec to USD41 million.
Despite the deal being completed, the company said the payout represents less than two times of EBITDA and said that, although it has always been a supporter of the Evo Morales government, the process has left its shareholders hesitant over Bolivian investment.
"We are not enemies of Bolivia but friends. However at times we have not been treated that way, and my shareholders in Britain will take a great deal of convincing before they invest any money in Bolivia in future," Rurelec Chief Executive Peter Earl said.
By Tom McIvor; [email protected]; @TomMcIvor1
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