MDU Resources purchases share of transmission line business in Brazil
Bismarck, ND
MDU Resources Group, Inc. (NYSE: MDU) announced today that its international business unit, MDU Brasil Ltda., purchased an interest in an operating electric energy transmission partnership.
MDU Brasil joined Companhia Energetica de Minas Gerais (CEMIG) and Brascan Brasil Ltda. in acquiring Schahin Energia’s interest in three electric energy transmission lines which Schahin had owned jointly with Cia. Tecnica de Engenharia Eletrica – Alusa in Brazil. Alusa continues its ownership in these transmission assets.
MDU Brasil invested US$50 million in the project.
“This partnership provides us with a solid investment for the proceeds received from the sale of our Brazilian electrical generation plant in June 2005,” said Martin A. White, chairman of the board and chief executive officer of MDU Resources.
The project involves the following electric energy transmission lines: Empresa Norte de Transmissao de Energia S/A – ENTE; Empresa Regional de Transmissao de Energia S/A – ERTE; and Empresa Catarinense de Transmissao de Energia S.A. – ECTE.
The transmission lines are located primarily in northeastern and southern Brazil. All lines are built, operational and receiving revenue from 30-year revenue contracts. The contracts provide for Brazilian denominated revenues, annual inflation adjustments and change in tax law adjustments. The lines have between 25 and 27 years remaining under the revenue contracts. The transmission lines are 500 kilovolts and 230 kilovolts and have a combined total distance of 900 kilometers.
The project offers long-term contracted revenue and cash flow, a sound regulatory structure with solid credit support, and revenue based on the availability of the lines and not on energy volumes flowing through the lines. The Brazilian National Development Bank has supported the transmission sector in general and these lines specifically by issuing non-recourse project debt secured by the assets and cash flow from the project.
MDU Brasil Ltda. is part of the international independent power production division of Centennial Energy Resources LLC, a wholly owned subsidiary of MDU Resources Group.
“We’re encouraged by the economic stability we see in Brazil and the need for infrastructure. This project is a good way to participate in this growth market,” said Paul Gatzemeier, president and chief executive officer of Centennial Energy Resources.
The information in this release includes forward-looking statements, including statements by the chairman of the board and CEO of MDU Resources Group, Inc. and the president and CEO of Centennial Energy Resources, within the meaning of Section 21E of the Securities Exchange Act of 1934. Although the company believes that its expectations are based on reasonable assumptions, actual results may differ materially. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the ability to effectively integrate acquired operations as well as the effects of foreign currency exchange changes. For a discussion of other important factors that could cause actual results to differ, refer to Item 1A – Risk Factors in MDU Resources’ most recent Form 10-K and Form 10-Q.
MDU Resources Group, Inc., a member of the S&P MidCap 400 index, provides value-added natural resource products and related services that are essential to energy and transportation infrastructure. MDU Resources includes natural gas and oil production, construction materials and mining, domestic and international independent power production, natural gas pipelines and energy services, electric and natural gas utilities, and construction services. For more information about MDU Resources, see the company’s Web site at www.mdu.com or contact the Investor Relations Department at investor@mduresources.com.
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(701) 530-1003
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(701) 530-1057
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(701) 530-1700