Page 58 - GEORptSep20

LSE-listed Georgian holding Georgia Capital has announced the buyout of the 34.4% minority shareholder, RP Global, in Georgian Renewable Power Company (GRPC) that is developing two hydropower projects and two wind power projects.
As part of the buyout, Georgia Capital will pay a fixed cash consideration of $13.8mn, of which $11.8mn represents total equity contributions received from RP Global, as well as an additional consideration for RP Global's technical assistance during the last six years. An additional deferred adjustable consideration of up to $4.5mn may be payable if actual market electricity sales prices are higher during 2023-2025 than the group's current internal forecasts. Following the buyout, Georgia Capital's renewable energy business will consist of its wholly-owned subsidiary GRPC, with only the 50MW Mestiachala Hydro Power Plants operational so far while the other projects on the pipeline, plus the wholly-owned Hydrolea HPPs and Qartli wind farm.
9.2.4 ​Utilities corporate news
Fitch downgrades Georgian water utility GWP
Fitch Ratings has downgraded Georgia-based Georgian Water and Power’s (GWP’s) long term foreign debt Issuer Default Ratings (IDR) to B+/stable from BB-.
The ratings agency simultaneously withdrew the GWP ratings.
The downgrade followed the alignment of GWP's ratings with those of its parent, Georgia Global Utility (GGU; B+/stable), reflecting strong ties between the two, including direct funding from the parent following the recent refinancing of all outstanding debt with a loan from GGU and the provision of guarantees to GGU's noteholders by GWP.
Fitch expected GWP to be the most significant operating company for GGU at 72% of average revenue and 60% of average Ebitda per year for 2020-2024. The GWP rating is supported by the company‘s natural monopoly position, solid profitability, improving regulatory environment, reduction of water losses, good receivable collection rates, asset ownership and low sector risk. This is offset by FX risk, worn out water infrastructure, and a group structure with related-party transactions (albeit decreasing and on market terms).
GWP's ratings have been withdrawn for commercial reasons. Fitch will no longer provide ratings or analytical coverage of GWP.
Fitch evaluated two main risks threatening GWP: tariffs and the exchange rate. The rating agency expected the second three-year regulatory period to start in 2021. It anticipated water supply tariffs to households to increase significantly in 2021 and then to remain flat in 2021-2023. A lower than expected tariff increase would pressure GWP's cash flows.
GWP's exposure to foreign exchange fluctuation risk has increased as all of its debt as of 12 August was US dollar-denominated, up from around 40% at end-2019. However, its debt is a loan from its parent GGU. In addition, its electricity sales are priced in dollars although payment is received in Georgian lari (about 13% of total revenue in 2019).
Tbilisi Water was founded by Tbilisi City Hall in 1997. The company listed assets of $199mn at the time of the 2008 privatisation deal for it. The water system was sold to Multiplex Energy Limited — a mysterious offshore company in the British Virgin Islands — without any public tender, according to ifact.ge​ and ​Transparency International​.
58​ GEORGIA Country Report ​September 2020 ​ ​www.intellinews.com