CENTRAL PUERTO S.A. current report, Q1 FY2019

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Business Context and Reporting Period

Company: Central Puerto S.A. (Port Central S.A.)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Date: February 27, 2019
Context: The Company notified the Argentine securities regulator (CNV) of its selection as the awardee in National and International Public Bid No. CTBL 01/2018, called by Integración Energética Argentina Sociedad Anónima (IEASA).

Key Financial Metrics and Transaction Details

Transaction Value: Total offer of USD 165,432,500.
Payment Structure:

  • Cash: USD 155,332,500 (minimum amount).
  • Receivables: USD 10,100,000 payable via "LVFVD" (Receivables from CAMMESA Without a Fixed due date) issued by CAMMESA.
Asset Valuation: Estimated residual value of the asset as of April 1, 2019, is approximately USD 161 million.
Debt Repurchase: On the Effective Date, the Company must repurchase debt securities from the Financial Trust equal to the difference between the residual value of the securities and the cash offer made.

Material Changes and Asset Specifications

Acquired Asset: Goodwill transference of the productive unit "Central Termoeléctrica Brigadier López" (Power Station) and associated real property.
Capacity:

  • Current installed capacity: 280 MW (Siemens technology TG).
  • Projected capacity: 420 MW (upon completion of late-stage cycle-closing works).
Effective Date: April 1, 2019.
Assumed Obligations: The Company will assume the contractual position of IEASA in various agreements, including energy supply agreements with CAMMESA (Turbogas and Turbosteam), a Financial Trust Agreement, gas transportation, maintenance, and insurance policies. The Company will also assume labor relationships with transferred employees.

Outlook, Risks, and Management Commentary

Management Commentary: The acquisition expands the Company's portfolio with a power station currently under construction for capacity expansion. The transaction involves assuming a complex web of existing contracts and a financial trust structure.
Risks and Contingencies:

  • Debt Repurchase Obligation: The requirement to repurchase debt securities on the Effective Date creates a contingent cash outflow dependent on the residual value of the trust securities versus the cash offer.
  • Construction Risk: The asset is in the late stage of construction for capacity expansion; delays could impact the realization of the 420 MW target.
  • Counterparty Risk: Reliance on CAMMESA for energy supply agreements and the validity of LVFVD receivables.
Guidance: The filing does not provide updated financial guidance or earnings outlook beyond the specific terms of this transaction.

Investor Verification Checklist

  • Verify the exact terms of the debt repurchase obligation on the Effective Date (April 1, 2019) to assess immediate liquidity impact.
  • Confirm the status of the cycle-closing works required to reach the 420 MW capacity.
  • Review the specific termination dates and terms of the Turbogas Supply Agreement (ending August 30, 2022) and the 10-year Turbosteam Supply Agreement.
  • Assess the creditworthiness and liquidity of the LVFVD receivables used as partial payment.
  • Confirm the final closing date and any conditions precedent to the transfer of the Financial Trust Agreement.