Summary
Artumas Group Inc. ("Artumas") (OSE:AGI) is pleased to announce the execution of an Arranger Agreement with FMO, the Netherlands Development Finance Company, to facilitate the financing of Artumas' planned 300 MW integrated power project (the "Project") in southern Tanzania.
The Arranger agreement will allow Artumas to focus its efforts directly on supporting E&P activities while still maintaining a 20% (US$ 12 to 15 million) equity interest in the generation project as its managing partner and sponsor.
The Project will be comprised of two distinct components; (i) generation and (ii) transmission, with FMO acting as Arranger for two structured finance facilities of approximately US$ 225 million and US$ 400 million, respectively.
FMO, a worldwide supplier of financial services, is 51% owned by the Dutch State, and 42% by the large Dutch banks including ING and ABN-AMRO. It is Artumas' view that FMO's demonstrated capabilities in Africa contribute to the Project through this agreement, significantly enhancing the probability of its success.
Stephen Mason, President & CEO of Artumas states, "It is expected the financing of the infrastructure component of the project will involve donor groups including various International Financial Institutions (IFIs) focused on supporting sustainable economic development initiatives. We are very pleased to be working with FMO, who will assist and arrange the required structured financing for the large integrated power project. Given FMO's experience in infrastructure investments in Africa, typically in syndication with a number of other IFIs, we feel very confident in reaching financial closing on what will certainly be a key contribution to Tanzania's future economic and social wellbeing."
The Project
A synopsis of the project structure is as follows:
The special purpose company, Tanzania Generation Company Ltd. ("TanGen") will build, own and operate the 300 MW gas-fired power plant located at Artumas' existing green-field site in Mtwara. The estimated capital cost of the 300 MW power plant is approximately US$225 million, of which approximately 70% (or US$160m) is expected to be financed through non-recourse project debt. Sources for the remaining private equity financing (US$65m) include Tanzania based pension funds, a multi-national mining company operating in Tanzania and investment bank groups in the Middle East and Europe, each of whom have expressed strong indications of interest to the project sponsor.
A second special purpose company will build, own, operate and transfer a high voltage transmission interconnection to the Tanzania national grid. This company will be owned by third party equity shareholders. The estimated capital cost of the transmission interconnection is approximately US$ 400 million. Discussions with private equity sources include Tanzania based pension funds and investment banking groups located in the Middle East. Artumas will not be taking an equity position in this special purpose company.
FMO Overview
FMO (http://www.fmo.nl/en/projects/index.php ) supports and partners with the private sector in developing countries and emerging markets. The organization provides different types of financing for commercial investors active in the production, transmission and/or distribution of both traditional and renewable energy.
