Places where we work

Explore our plants and learn more about the technology we are using to make the future bright.

Contact us

We are present in 19 countries all over the world

Acquisition of Combined Heat and Power Portfolio in Mexico from Alpek

07 January 2019 | London | Author: ContourGlobal plc

$724 million purchase price plus $77 million of refundable VAT




ContourGlobal plc (the “Company” or “ContourGlobal”) today announces it has reached agreement with Alpek S.A.B. de C.V, (“Alpek”, BMV:ALPEKA)  to acquire Alpek’s portfolio of two natural gas-fired combined heat and power (“CHP”) plants, together with development rights and permits for a third plant, for $724 million in cash (the “Acquisition”). An additional payment at closing estimated at $77 million represents the Value Added Tax (VAT) assessed for the transaction and is expected to be refunded in full within 12 months of closing. The two CHP plants will provide electricity and steam under long-term contracts to subsidiaries of Alfa S.A.B. de C.V (“Alfa Group”, BMV: ALFAA), a leading Mexican industrial conglomerate, and other commercial and industrial customers.

The CHP plants are located on sites adjacent to, and interconnected with, Alpek’s industrial facilities and have a gross installed capacity of 518MW.  Additionally, ContourGlobal will be acquiring the development rights and permits for a third adjacent plant with a planned capacity of 414MW (collectively, the “Assets”).


Joseph C. Brandt, President and CEO of ContourGlobal commented:

“We are delighted to expand our cogeneration Solutions business into Mexico with the acquisition of Alpek’s combined heat and power plants. We have developed our Solutions business over the past decade with blue chip clients like Alpek and look forward to powering their growth over the long-term.

"This accretive transaction fits squarely into our strategic and financial approach to acquisitions. It was highlighted during our IPO and reflects our commitment to pursue high quality growth through operationally led strategic acquisitions and to double adjusted EBITDA without issuing new equity within five years of our listing.  We are closer to achieving this objective with this acquisition, which we expect to add approximately $110 million to our adjusted EBITDA in the first full year of operations.”


Strategic Rationale

  • Highly efficient cogeneration facilities. The Assets are highly efficient cogeneration facilities similar to those ContourGlobal operates in its Solutions Division for industrial customers including Coca-Cola Hellenic, AmBev and Ingredion. These plants provide multiple products of value for industrial partners, including electricity, heat, steam, chilled water and in several facilities, the capture of CO2[1]. The business is expected to achieve substantial growth beyond the existing portfolio of assets and clients.
  • Benefit from favourable regulatory regime. The Assets enjoy the benefits associated with the Legado regulatory framework which provides benefits to customers when they acquire power and other energy products including from high-efficiency cogeneration natural-gas fired power plants. Recognizing its superior efficiencies to conventional gas and liquid fired generation, this technology is designated as clean energy under the Mexican regulation.
  • Attractive growing power market. Mexico is Latin America’s second largest power market.  It continues to achieve high rates of growth in low carbon resources and is a market in which ContourGlobal has been active for several years, as the Company is developing a 300MW wind farm in Baja California.  Mexico has committed to increasing its share of clean energy in its power mix to 35% by 2024, up from 21% in 2016. Cogeneration such as CHP is specifically included as a clean energy technology for the purposes of reaching this target.
  • Long-term contracts with leading Mexican companies. The Acquisition is consistent with ContourGlobal’s strategy of developing and operating power assets supported by long-term contracts, here, from multi-year offtake agreements with leading Mexican industrial and commercial companies including Alpek subsidiaries and other affiliates within the Alfa Group. At closing, the operational Assets are expected to have around 90% of their power plus all steam revenues under long-term contract.  Approximately 30% of revenues in the next 10 years are expected to be generated from contracts with affiliates of Alpek.
  • Additional development opportunity. The Acquisition includes the attractive opportunity to construct a third plant with a planned capacity of 414MW. The project includes certain permits already granted and would be located adjacent to the plant being commissioned in Altamira, which would provide cost efficiencies including shared supply infrastructure.

Attractive Financial Investment

  • Significant EBITDA contribution. The Assets will deliver contracted USD earnings with high quality, blue-chip clients with an expected EBITDA contribution of $110 million in their first full year of operations. These CHP plants benefit from USD denominated contracts for electricity and steam.
  • Earning accretive. Significantly earnings accretive, enhancing the Group’s ability to invest in the business and concurrently support a growing dividend to shareholders.
  • Attractive amortizing project financing. Amortizing USD project financing to be fully underwritten and led by The Bank of Nova Scotia ("Scotiabank") of up to $590 million to be entered into at closing; Group net debt to Adjusted EBITDA is expected to be in the range of 4-4.5x within 12 months of closing. 
  • Credit accretive.  Credit accretive acquisition with high quality, long-term contracted USD revenues and contractual right to pass through fuel commodity costs, consistent with operating strategy.

High Quality Low Carbon Combined Heat & Power Assets

  • The portfolio being acquired consists of 932MW of potential capacity, located on Alpek’s petrochemical sites in the Mexican states of Veracruz and Tamaulipas, of which 518MW will be operational by closing. The total portfolio comprises: 104MW of existing operational capacity; 414MW currently undergoing commissioning and scheduled to enter commercial operations within the first half of 2019; and development rights and permits for an additional adjacent 414MW plant.
  • One plant, located in Cosoleacaque, Veracruz state, CELCSA, has a capacity of 104MW and entered into commercial operations in December 2014.  It provides power and steam to the Alfa Group's adjacent petrochemical plants under 20-year contracts signed in 2014, with excess power output supplied to large industrial and commercial clients in Mexico, including with other Alpek affiliates, through medium and long-term power purchase agreements (“PPAs”).
  • The second plant, CGA1, located in Altamira, Tamaulipas state has a projected capacity of 414MW, and was constructed under a turnkey EPC contract with a subsidiary of the Spanish industrial conglomerate, Grupo ACS.  Construction commenced in 2016 and commissioning is currently underway with the expected entry into commercial operations in the first half of 2019.  ContourGlobal’s obligation to complete the Acquisition is conditional upon CGA1 successfully completing its commissioning tests and entering into commercial operations. The facility is adjacent to a petrochemical plant owned by Alpek and will provide steam production and power output under a 20-year contract. Similar to CELCSA, it sells the excess power output to a diversified portfolio of commercial and industrial clients, including to other Alpek affiliates, through medium and long-term PPAs.


Financing the Acquisition

  • The estimated total consideration payable at completion of $724 million plus refundable VAT is expected to be financed through a combination of an amortizing USD project financing of up to $590 million, together with existing cash resources of the Company.
  • The CHPs are a USD business with predominately USD-linked PPAs. Mexican peso-denominated contracts are entered into for the purpose of mitigating exposure to local fixed and variable costs.


Conditions to Complete the Acquisition

The Acquisition, including break-fee arrangements, is classified under the Listing Rules as a Class 1 transaction and therefore is conditional, amongst other things, on the approval of ContourGlobal’s shareholders.  The Company and Alpek have obtained an irrevocable undertaking from ContourGlobal L.P., which as at 31 December 2018 owned approximately 71% of the ordinary share capital of the Company, to vote in favour of the inter-conditional shareholder resolutions to be proposed in connection with the Proposed Acquisition.


Presentation and conference call

The Company will host a call for investors at 11.30 am (UK time). UK conference call numbers are Freephone 0800 358 6377 / +44 (0)330 336 9105 and US Freephone 800-289-0438 / +1 323-794-2423.  Participant code is 5900252.
The presentation for the call can be downloaded at




Investor Relations - ContourGlobal

Ross Hawley

Tel: +44 (0) 207 355 7333 / 07393 750 733


Media - Brunswick

Charles Pretzlik/Simon Maine

Tel:  +44 (0) 207 404 5959


About ContourGlobal

ContourGlobal is listed on the premium segment of the London Stock Exchange (TKR: GLO). ContourGlobal is an international owner and operator of contracted wholesale power generation businesses.  Pro-forma for the Acquisition, it owns and operates approximately 4,830 MW in 103 power plants in 19 countries and three continents.



Alpek is a leading petrochemical company operating two business segments: “Polyester” (PTA, PET and polyester fibers), and “Plastics & Chemicals” (polypropylene, expandable polystyrene, caprolactam, and other specialty and industrial chemicals). Alpek is an integrated producer of PTA and PET in North America, the largest expandable polystyrene manufacturer in the Americas, and the only producer of caprolactam in Mexico. Alpek also operates one of the largest polypropylene facilities in North America. In 2017, Alpek reported revenues of $5.2 billion and EBITDA of $384 million. The Company operates 26 plants in the United States, Mexico, Canada, Brazil, Argentina and Chile, and employs more than 5,900 people. Alpek is a publicly traded company listed on the Mexican Stock Exchange.


About ALFA

ALFA is a holding company that manages a portfolio of diversified subsidiaries: Sigma, a leading multinational refrigerated food company, focused on the production, marketing and distribution of quality foods through recognized brands in Mexico, Europe, United States and Latin America. Alpek, one of the world’s largest producers of polyester (PTA, PET and fibers), and the leader in the Mexican market for polypropylene, expandable polystyrene (EPS) and caprolactam. Nemak, a leading provider of innovative lightweighting solutions for the global automotive industry, specializing in the development and manufacturing of aluminum components for powertrain, structural components and for electric vehicles. Axtel, a provider of Information Technology (IT) and Communication services for the enterprise, government and mass market in Mexico. Newpek, an oil and gas exploration and production company with operations in Mexico and the United States. In 2017, ALFA reported revenues of Ps. 317,627 million ($16.8 billion), and EBITDA of Ps. 38,312 million ($2.0 billion). ALFA’s shares are quoted on the Mexican Stock Exchange and on Latibex, the market for Latin American shares of the Madrid Stock Exchange.




The weighted average life of contracts connected with the facilities is expected at closing to be approximately 11 years and, pro forma for this Acquisition, the weighted average life of contracts for ContourGlobal’s portfolio is expected to remain at approximately 12 years. 



Historic financial revenue and profit information for the Assets relates only to the 104MW Veracruz plant which has been operational since 2014.  For the year ended 31 December 2017 this generated Adjusted EBITDA of $20 million and profit before tax of $13 million.  Gross assets attributable to the Acquisition including the CHP plant under construction were $380 million as at a balance sheet date of 31 December 2017.


Summary of Key Terms of Transaction

On 6 January 2019, a share purchase agreement (the "Share Purchase Agreement") was entered into between ContourGlobal Terra 3 S.à.r.l. (the "Buyer"), a wholly-owned subsidiary of the Company, as purchaser, the Company, as guarantor, and Alpek, S.A.B. de C.V., as seller, whereby the Buyer will acquire not less than 99.5% of the share capital of Cogeneración de Altamira, S.A. de C.V. that at closing will own not less than 99.5% of the share capital of Cogeneración de Energía Limpia de Cosoleacaque, S.A. de C.V., which together will own the Assets.   

The consideration payable to Alpek in respect of the Acquisition is approximately $724 million, to be paid in cash at closing. An additional payment at closing estimated at $77 million represents the Value Added Tax (“VAT”) assessed for the transaction and is expected to be refunded in full within 12 months of closing. The total consideration including refundable VAT amounts to $801 million.   As part of the Acquisition, a price adjustment is expected to happen at closing to reflect working capital variations and other adjustments foreseen in the Share Purchase Agreement.


Completion of the Acquisition is expected to occur in the second quarter of 2019 and is conditional upon, inter alia, commencement of commercial operations at Altamira; a favorable resolution issued by the Mexican antitrust authority (Comisión Federal de Competencia Económica); and (because the Proposed Transaction is classified under the Listing Rules as a Class 1 transaction) the approval of the Company's shareholders.


Completion of the Acquisition is supported by certain break fee arrangements, as described below:

  • The Buyer has agreed to pay a break fee of $15.78 million, which is equal to 1% of the market capitalization of the Company at the time of entry into the Share Purchase Agreement, if shareholder approval for the Acquisition is not secured within 105 calendar days after the execution of the Share Purchase Agreement (and a further cure period of 23 days thereafter if delay is outside control of the Buyer).
  • In addition, each of the Buyer and Alpek has agreed that it will pay an increased break fee of $20 million to the other if it breaches certain provisions of the Share Purchase Agreement, subject to approval of the Company’s shareholders. As the payment of a break fee of this amount by the Buyer would itself be classified as a Class 1 transaction of the Company under the Listing Rules, it, too, requires Company shareholder approval (which approval has been made inter-conditional with shareholder approval of the proposed acquisition).  Until those inter-conditional approvals are obtained, the amount of the break fee payable by either the Buyer or Alpek is capped at $15.78 million, which is equal to 1% of the market capitalization of the Company at the time of entry into the Share Purchase Agreement.

Full details of the terms of the Share Purchase Agreement will be set out in the Circular for shareholder approval of the proposed transaction, to be published in due course.



ContourGlobal L.P., the Company's majority shareholder holding, as at 31 December 2018, approximately 71% of the ordinary share capital, has provided an irrevocable undertaking to vote in favour of the inter-conditional resolutions to approve the Acquisition and the increased break fee described above.


Important Notice

This announcement has been issued by and is the sole responsibility of the Company. The information contained in this announcement is for background purposes only and does not purport to be full or complete. The information in this announcement is subject to change without notice. Subject to the UK Listing Rules, the UK Disclosure Guidance and Transparency Rules and the Market Abuse Regulation (EU) No. 596/2014, the issue of this announcement shall not, under any circumstances, create any implication that there has been no change in the affairs of ContourGlobal or Alpek since the date of this announcement or that the information in this announcement is correct as at any time subsequent to the date of this announcement.


Certain information contained in this announcement, including any information as to ContourGlobal’s or Alpek’s strategy, plans or future financial or operating performance constitutes “forward-looking statements”. These forward-looking statements can be identified by the use of terminology such as, “aims”, “anticipates”, “assumes”, “believes”, “budgets”, “could”, “contemplates”, “continues”, “estimates”, “expects”, “intends”, “may”, “plans”, “predicts”, “projects”, “schedules”, “seeks”, “shall”, “should”, “targets”, “would”, “will” or, in each case, their negative or other variations or comparable terminology. Forward-looking statements appear in a number of places throughout this announcement and include, but are not limited to, express or implied statements relating to ContourGlobal’s business strategy and outlook; ContourGlobal’s and the Alpek’s future results of operations; ContourGlobal’s and the Alpek’s future financial and market positions; expectations as to future growth; general economic trends and other trends in the industry in which ContourGlobal and Alpek operates; the impact of regulations on ContourGlobal and its operations; and the competitive environment in which ContourGlobal and Alpek operates.


By their nature, forward-looking statements are based upon a number of estimates and assumptions that, whilst considered reasonable by the Directors and the Company, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those indicated, expressed or implied in such forward-looking statements. Forward-looking statements are not guarantees of future performance. Any forward-looking statements in this announcement reflect the Directors’ and the Company’s current view with respect to future events and are subject to certain risks relating to future events and other risks, uncertainties and assumptions. The forward-looking statements contained in this announcement speak only as at the date of this announcement. The Directors and the Company disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this announcement to reflect any change in their expectations or any change in events, conditions or circumstances on which such statements are based unless required to do so by applicable law, the UK Prospectus Rules, the UK Listing Rules, the UK Disclosure Guidance and Transparency Rules of the Financial Conduct Authority and the Market Abuse Regulation (EU) No. 596/2014 . You are cautioned against placing undue reliance on any forward-looking statement in this announcement.


A copy of the Circular when published will be available from the registered office of the Company and on the Company's website at Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this announcement.


[1] CHP technology offers superior efficiency to industrial energy users where there is on-site demand for both power and steam as part of a manufacturing process. Thermal efficiencies for a CHP plant can exceed 85% and are higher than a typical combined cycle gas turbine (“CCGT”) power plant due to the combined power and heat generation.