Lawyers have closed State Grid Corporation of China’s landmark Brazilian acquisition using price and debt mechanisms to overcome a last minute change-of-control hurdle.
The international investment arm of State Grid, the world’s largest utility company, acquired seven concessionaires and 3,200 km of transmission lines in one of China’s largest investments into Latin America.
But the deal’s pricing had to be reworked when the project banks were reluctant to waive change-of-control provisions contained in the targets’ financing facilities. The outcome of buyer/seller negotiations on the point was to repay the loans and build that debt into the purchase price, which became $1.8 billion (including debt).
“This was the structural challenge of the transaction,” said Juan Martín Perrotto, a partner with sellers’ counsel Uría Menéndez. “[But] the most formidable challenge is the cultural one.”
State Grid’s acquisition is the latest example of growing investment ties...