Cahora Bassa Hydro Power Dam - Mozambique

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	Situational Analysis Hidroeletrica de Cahora Bassa S.A.R.L. is the concession company for the Cahora Bassa dam and 2,075MW hydroelectric power plant in Mozambique and for the 533kV HVDC line to the South Africa border (HCB). For various historical reasons, HCB was unable to make debt service payments to the Government of Portugal for more than 20 years and as a result, the debt outstanding to GOP prior to the restructuring amounted to some $3.0 billion. In the meantime the power sales contract with Eskom was also unchanged at 2 ZAR cents while the Rand lost significant value against the US $, the predominant currency of the outstanding loans. In order to restructure the project and create value for GOM, the contracts for the sale of power to Eskom and others needed to be revised and updated, the existing debt needed to be restructured and capital invested in the refurbishment of the facilities. As a result of the successful conclusion of these activities, it was agreed between GOM and GOP that the debt outstanding would be capitalised and that GOM would pay GOP $700 million with the result that HCB would be owned 85% by GOM and 15% by GOP. Fieldstone Role Fieldstone acted as financial adviser to GOM. We advised on the new contractual arrangements with Eskom and the Governments of South Africa, financial restructuring and on the negotiations with GOP that led to the signature of the various agreements between the two Governments in November 2006.

Situational Analysis

Hidroeletrica de Cahora Bassa S.A.R.L. is the concession company for the Cahora Bassa dam and 2,075MW hydroelectric power plant in Mozambique and for the 533kV HVDC line to the South Africa border (HCB).

For various historical reasons, HCB was unable to make debt service payments to the Government of Portugal for more than 20 years and as a result, the debt outstanding to GOP prior to the restructuring amounted to some $3.0 billion. In the meantime the power sales contract with Eskom was also unchanged at 2 ZAR cents while the Rand lost significant value against the US $, the predominant currency of the outstanding loans.

In order to restructure the project and create value for GOM, the contracts for the sale of power to Eskom and others needed to be revised and updated, the existing debt needed to be restructured and capital invested in the refurbishment of the facilities.

As a result of the successful conclusion of these activities, it was agreed between GOM and GOP that the debt outstanding would be capitalised and that GOM would pay GOP $700 million with the result that HCB would be owned 85% by GOM and 15% by GOP.

Fieldstone Role

Fieldstone acted as financial adviser to GOM. We advised on the new contractual arrangements with Eskom and the Governments of South Africa, financial restructuring and on the negotiations with GOP that led to the signature of the various agreements between the two Governments in November 2006.