FAIRFAX, Va.--- PP&L Global, Inc. , in conjunction with its Chilean partner, has acquired a 75 percent interest in Distributidora de Electricidad del Sur, S.A. de C.V. (DelSur), an electricity distribution company serving 193,000 customers in El Salvador.
Under the purchase agreement, PP&L Global, a subsidiary of PP&L Resources, Inc. (NYSE: PPL), will directly acquire 37.5 percent of DelSur and Emel S.A. of Chile will acquire the other 37.5 percent. PP&L Global owns about 27 percent of Emel, a company that owns and operates electricity distribution systems in Chile and Bolivia.
PP&L Global and Emel will initially fund the $180.1 million investment with equity and will later finance a portion of the investment with limited recourse debt. Financial closing occurred Tuesday (2/17).
"This is an important expansion of PP&L Global's operations in this region of the world," said Robert D. Fagan, president of PP&L Global. "We are very excited about the excellent prospects for growth in El Salvador, Chile, Bolivia and other countries throughout Latin America."
The El Salvador investment brings PP&L Global's total investment in Central America and South America to $245 million. PP&L Global has investments and commitments worldwide of about $460 million.
Fagan said the prospects for increased growth in DelSur are very good. The company serves the central and southern regions of El Salvador, including a portion of the capital, San Salvador, the country's international airport and the areas of La Libertad, San Vincent and La Paz. DelSur is one of five electricity distribution companies in El Salvador that are being privatized by the government.
About 70 percent of the 1.2 million residents of the 1,600-square-mile area served by DelSur have electricity service. Revenues are about $94 million annually. Fagan said electricity sales in the region are expected to grow by over 5.5 percent per year over the next five years.
"This is a growing region in the only Central American country that is rated as investment grade by Moody's," said Fagan. "This also is an excellent opportunity to continue to extend our relationship with Emel, which has proven to be an excellent partner for our expansion in this region of the world."
Under the agreement signed Tuesday, Emel will operate DelSur.
PP&L Global also has investments in Europe, where it owns 25 percent of SWEB, an electric company that serves 1.3 million customers in southwest England. In addition, PP&L Global has investments in Spain and Portugal.
Fagan said that PP&L Global is concentrating its international efforts on South America, Central America and Europe. The company also is actively pursuing opportunities in the United States as the domestic marketplace becomes deregulated.
"PP&L Global is significantly ahead of the investment schedule that we set out when we formed the company in 1995," said Fagan. "Weare extremely pleased with the progress we have made and the excellent partnerships that we have been able to establish."
PP&L Resources also is the parent company of PP&L, Inc. , which provides electricity delivery services to 1.2 million customers in Pennsylvania; generates electricity; sells retail electricity throughout Pennsylvania; and sells wholesale electricity in 22 states and Canada.
Other PP&L Resources subsidiaries include: PP&L Spectrum , whichprovides energy related products and services, and H.T. Lyons, an energy management and heating, ventilating and air-conditioning contractor.