China Hydroelectric Corp. to acquire hydro project

New York City, April 14, 2010 — China Hydroelectric Corp., a consolidator, developer and operator of small hydroelectric power projects in China, agreed to acquire an additional 19 MW hydroelectric power project in China.

Together with the previously announced pending acquisition of a 44 MW hydroelectric power project in the Yunnan province of China, the projects would add a total of 63 MW to the company’s portfolio of operating hydroelectric assets.

In addition, the company announced it has entered into two memoranda of understanding regarding the acquisition by the company of an additional 180 MW of operating hydroelectric assets, 125 MW of projects currently under construction and 341 MW of development rights for new projects.

Along with the definitive agreements, these memoranda present the company with the opportunity to acquire 709 MW of hydroelectric power projects and development rights.

The new definitive agreement provides for the company to acquire 100 percent of the 19 MW Husahe Project, located in Yunnan province, for a purchase price of $15.5 million.

This acquisition, for which the company had a MOU and which is expected to be consummated shortly, will be financed through cash on hand and a note from the seller which may be refinanced with non-recourse bank debt from a local institution.

Previously the company had announced that it had executed a definitive agreement for the company to acquire 100 percent of the 44 MW Xiaopengzu Project, also located in Yunnan province, for a purchase price of $57 million.

This acquisition, which the company anticipates consummating within the next 45 days, is expected to be financed through cash on hand and bank financing expected to be provided under the terms of the company’s previously announced Loan Framework Agreement with the Bank of China’s Fujian Branch. Both acquisitions are subject to customary closing conditions, including obtaining governmental approvals.

The two memoranda of understanding provide the company with the exclusive right to acquire:

1.   A majority interest to 100 percent control in the Taiyu Projects, a group of seven operating hydroelectric projects aggregating 114.4 MW in Fujian province; and

2.   100 percent of the Minrui Projects, a group of projects in Yunnan province including 4 operating hydroelectric projects aggregating 66 MW, 3 projects under construction aggregating 125 MW, and the development rights to 9 projects aggregating 341 MW.

The company has made down payments with respect to the Taiyu and Minrui Project memoranda, which include penalties to the sellers for cancellation. Subject to the satisfactory completion of its due diligence review, the Company expects to enter into definitive agreements to acquire and finance these projects in the near term.

China Hydroelectric Corp. is a consolidator, developer and operator of small hydroelectric power projects in China. Led by an international management team, the company’s primary business is to identify and evaluate acquisition and development opportunities and acquire, and in some cases construct, small hydroelectric power plants in China.

China produces about 22 percent of its total energy from hydroelectric energy.

The company currently owns twelve operating hydropower projects in China with total installed capacity of 377 MW. These projects are located in four provinces: Zhejiang, Fujian, Yunnan and Sichuan. In addition, CHC recently expanded operations through the acquisition, pending government approval, of development rights to a 1,000 MW pumped storage hydropower plant in Henan.


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