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EPM Headquarters in Medellin (Upper Right) EPM Headquarters in Medellin (Upper Right) Source: EPM

Update: EPM Adopts US$5.3 Billion Budget for 2019; Wins US$1 Billion Credit-Lines OK

Published in Companies Written by  November 23 2018 font size decrease font size increase font size 0
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Medellin-based multinational power and utilities giant EPM announced November 27 that its board adopted a full-year 2019 budget of COP$17.4 trillion (US$5.3 billion), which includes a COP$1.1 trillion (US$337 million) payment of profits to its sole shareholder: the city of Medellin.

Another COP$1.1 trillion (US$337 million) in 2019 will go for repairs and continuing build-out of its 2.4-gigawatt “Hidroituango” hydroelectric dam in Antioquia, according to the company.

Fully 50% of the funds for the 2019 budget will come from continuing revenues (COP$8.6 trillion/US$2.6 billion); another 22% via the sale of its 10% interest in Colombian power producer ISA as well as its Chilean power and water assets (COP$3.8 trillion/US$1.16 billion); 6% from its credit resources (COP$1 trillion/US$306 million) and the remainder from other operations, including COP$438 billion (US$134 million) via dividends from national and international subsidiaries, according to the company.

Production and marketing costs will account for 32% (COP$5.5 trillion/US$ 1.7 billion) of the 2019 budget, while debt service will take 21% (COP$3.6 trillion/US $ 1.1 billion).

Operating expenses will account for 19% (COP$3.3 trillion/US$1 billion) of the budget, including payments to the city of Medellin. Other investments will consume 18% (COP$3.2 trillion/US$ 978 million) of the budget, while the remaining 10% (COP$1.8 trillion/US$550 million) will go to cash reserves, according to the company.

Credit-Line Approvals

Meanwhile, EPM announced November 22 that it won line-of-credit approvals totaling more than US$1 billion from two sources: Colombian banking giant Bancolombia as well as three divisions of global banking giant HSBC.

The Bancolombia line-of-credit for COP$1 trillion (US$313 million) will “facilitate the continuation of our investment plans in public-service infrastructure,” according to EPM.

That line of credit carries a three-year repayment term. These funds “will only be used when EPM requires them within the next 24 months,” according to the company.

Meanwhile, Colombia’s Treasury Ministry simultaneously cleared the way for EPM to sign separate contracts with three divisions of banking giant HSBC for a line-of-credit worth US$750 million, according to the company.

“Of these resources, US$215 million will be used to finance the investment plan (2014-2022) of the company and US$535 million will be used for general corporate purposes other than investment,” according to the Ministry.

Of that total, US$650 million will come from HSBC Bank USA and HSBC México S.A., while the other US$100 million will come from Grupo Financiero HSBC. Loan term is three years from the signing, at a six-month LIBOR rate plus 2.75% per year, and a 30-month availability period starting from the date of contract signing, according to the Ministry.

These new lines of credit “complement the plan to sell some assets of the company,” including EPM’s 10% stake in Colombian power generator ISA as well as Chilean power-and-water utility holdings, according to EPM.

The asset sales and new credit lines respond to future financial challenges resulting from problems with EPM’s "Hidroituango” hydroelectric project here in Antioquia.

EPM general manager Jorge Londoño de la Cuesta added that “this financing allows the company to strengthen its liquidity alternatives -- when our cash-flow requires that -- in the next 24 months.”

Read 291 times Last modified on Last modified on November 28 2018

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