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ContourGlobal to acquire gas-fired portfolio in Mexico for $724M

London-headquartered power company ContourGlobal PLC struck a deal to acquire a portfolio of two natural gas-fired combined heat and power plants in Mexico from the Mexican chemical manufacturing company Alpek SAB de CV.

The $724 million acquisition includes development rights and permits for a third plant in the country, according to a Jan. 7 news release. ContourGlobal also will pay an additional $77 million of value added tax, which is expected to be refunded in full within 12 months of closing.

The portfolio consists of a 104-MW power plant in Cosoleacaque, Veracruz state, which entered commercial operation in December 2014; a 414-MW facility in Altamira, Tamaulipas state, which is expected to reach commercial operation in the first half of 2019; and the development rights and permits for an additional 414-MW power plant.

The first two projects will supply power and steam to subsidiaries of Mexico's Alfa SAB de CV under long-term contracts.

ContourGlobal expects to finance the transaction through existing cash resources. The company expects amortize project financing of up to $590 million that will be fully underwritten and led by the Bank of Nova Scotia.