Rurelec PLC (LON:RUR), the power plant developer and owner-operator of power generation assets in Latin America, said it has today placed a total of 4.25 million new shares with existing institutional shareholders at 10 pence each to raise £425,000 before expenses.
The net proceeds will be used to accelerate preparations to initiate the international arbitration process as Rurelec pursues its compensation claim against the Bolivian government for the nationalisation of the controlling stake in Empresa Guaracachi SA held by its US subsidiary Guaracachi America Inc.
The Nationalisation was a part of the 2010 May Day programme in which three privately-owned power generating companies, a regional distribution company and a national electricity transmission company were brought into state ownership by means of a Supreme Decree issued by Bolivia's President Evo Morales on May 1.
The funds from the placing will be used to help fund costs associated with initiating the international arbitration process to ensure that the international right to receive fair market value of its investment is respected.
Rurelec expects that its Argentine business, Energia del Sur (EdS), will be in a position to refinance its loan with Standard Bank PLC within the next two months, following initiation of its Resolution 220 contract, from CAMMESA, the wholesale electricity market administrator. The refinancing will allow EdS to start repaying loans and interest on funds lent by Rurelec.
The group pointed out that the latest fundraising will not provide Rurelec with sufficient working capital to satisfy its total medium and long term requirements without the anticipated refinancing of the Standard Bank loan or the extension of current facilities due to expire during the current financial year.
An announcement will be made at the appropriate time if there is any further change in the financial condition of the group, it added.