EPM rectifies information about Hidroituango

Company News    Dec 12, 2021 1:01 PM

EPM rectified information published in Portafolio, related to an IDB Invest loan to the company for Hidroituango.

The company’s rectifications are as follows:

Portafolio Text:

“The above, having as a backdrop that between September and October of this year, the IDB sent ultimatums with the warning that if the megaproject did not generate energy in June 2022, as planned, EPM should pay the total debt and that, in addition, it would withdraw from the project.”

Rectification 1:

“EPM did not receive communications from the IDB with “ultimatums” between September and October 2021, instead both entities held an extensive meetings, in which communication was shared on behalf of EPM and the Bank’s concerns about the Ituango project were addressed, in a professional environment.”

Portafolio Text:

“However, hours after the EPM’s announcement of its intention to advance the payment with the IDB, what actually happened was that the first to go out to collect the loan was the international organization through an official letter dated November 30 (one day earlier), and with the argument that on repeated occasions they had insisted on handling the mega project with greater seriousness and the failure to respect the Corporate Governance.”

Rectification 2:

“EPM did not receive any type of letter from the IDB neither in November 30, nor to date, in which the bank demanded payment of the loan. False and complex statement that must be rectified. Instead, both parties, in a teleconference held on December 1, 2021, reached the agreement that EPM would receive a waiver to make an early payment in December 2021 (the original contract only allows early payments on specific interest payment dates, which contractually makes such waiver necessary), this in view of the uncertainty expressed by the bank in relation to the signing of the extension to the construction contracts.”

Portafolio text:

“Likewise, the resources of the announced prepayment with the IDB (US$450M), and which should be made next Friday, December 17, there is still no total certainty where they will come from, and although the company made a bond issue in 2020, it is most likely that they will have to make cuts and adjustments to the 2022 operating budget, to meet the payment.”

Rectification 3:

“There is certainty where the resources will come from and EPM even published it in the Relevant Information mechanism of Superfinanciera on December 2: resources available in its cash. The payment date is not Friday, December 17, it was agreed for December 22. To note that “it is most likely that they will have to make cuts and adjustments to the 2022 operating budget to meet the payment” is speculative. If it is put, it should be made clear that it is personal opinion of the columnist without having figures or data to support that conclusion.”

Bottom-Line: EPM confirms that it will use its cash to prepay a loan it was not being charged in advance.

Seems to us like a poor decision (personal opinion of the website), as this will probably affect their investment capacity and cash flow, considering that US$450M is a significant amount.

Or perhaps, EPM is confident of reaching an agreement with the insurers for the payment of the financial detriment of the fiscal process.

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