AquaVenture Holdings Limited, a provider of Water-as-a-Service™ solutions has entered into a binding agreement with Abengoa Water to purchase a majority interest in a desalination plant in Accra, Ghana.
The plant has the capacity to deliver approximately 18.5 million gallons (60,000 m3) per day of potable water to Ghana Water Company Limited (“GWCL”) under a long-term, U.S. dollar denominated water purchase agreement. Political risk insurance is provided to the project lenders and project equity sponsors by Multilateral Investment Guarantee Agency (MIGA), a division of the World Bank.
The facility has been operational since 2015 and, through its customer, supplies water to approximately 500,000 residents of Accra. The base purchase price for this interest is approximately $26 million, subject to adjustment in accordance with the purchase agreement.
Completion of the purchase, which is expected to occur by the end of the second quarter of 2018, is subject to the satisfaction of certain conditions precedent.
Doug Brown, Chairman and CEO of AquaVenture Holdings, commented: “We are excited about this project. This will be our first desalination plant in Africa. The acquisition will expand our base of facilities that provide WAAS solutions to our customers. We look forward to working with the project stakeholders in completing the various conditions to closing and becoming a long-term partner to the Government of Ghana for water treatment and services.”
The transaction is structured as the purchase of the entire share capital of Abengoa’s subsidiary that holds a 56% economic interest in Befesa Desalination Developments Ghana Limited (“BDDG”), the Ghanaian company that owns the plant.
The purchase price is subject to adjustment based on the results of negotiations with GWCL regarding changes to the water purchase agreement and with BDDG’s lenders regarding the existing financing arrangements, among other things.
Closing conditions include the receipt of required approvals from BDDG’s other shareholders and Abengoa’s lenders, as well as those required under BDDG’s financing arrangements, the execution of a legally binding heads of terms among the Government of Ghana, GWCL and BDDG in which the parties agree to revise the water rates charged under the water purchase agreement and the indexation of those rates, the receipt of the approval of the credit committees of BDDG’s lenders to changes to the terms and conditions of BDDG’s financing arrangements, and there being no material breach by BDDG under the project or financing documents, as well as certain other customary closing conditions.
AquaVenture Holdings has also offered to purchase the remaining 44% economic interest in BDDG on the same principal terms and is in active negotiations with that shareholder.