Chile's Alto Maipo starts debt restructuring process as startup nears

Chile’s embattled US$3.05bn Alto Maipo run-of-the-river project (pictured) in the central metropolitan region has begun a process of “financial reorganization” to restructure its US$1.44bn debt pile and create a more sustainable capital structure.

Project holder Alto Maipo reached a restructuring “pre-agreement” with its creditors, owner AES Andes said in a release. This will allow the firm to decouple financially from the subsidiary.

“As a result of this process, in accordance with the provisions of the International Financial Reporting Standards, AES Andes will deconsolidate the subsidiary Alto Maipo SpA from its financial statements and will recognize a net loss of approximately US$1.1bn on its income statement for the fourth quarter of 2021,” the firm said.

The company also restated that it would not receive any “material dividends” from the operation of the project, which began construction in 2013 on a budget of US$700mn, which has since ballooned as deadlines were consistently missed. The project’s complexity stems from its large underground tunnel structure, which presented unforeseen challenges.

Source: AES Andes.

Another problem in the project’s development involved disagreements with previous contractor Constructora Nuevo Maipo, which led both firms to an arbitration case that was settled earlier this month. The International Chamber of Commerce ordered the contractor to pay US$106mn in compensation to Alto Maipo.

After the project briefly defaulted in 2017, Strabag assumed the works later that year.

Earlier this month, AES Andes said it expected the project to be fully operational by March 2022.

“We are completing the water loading process during this trimester [4Q2021] and we will start generating in December. We expect to have full commercial operation after an approval by authorities during the first quarter of 2022,” said CEO Ricardo Falú during the firm’s Q3 conference call.