New York City, October 19, 2010 – China Hydroelectric Corp., an owner, developer and operator of small hydroelectric power projects in China, signed a framework agreement with China Guangdong Nuclear Energy Development Co. for the equity transfer of a controlling interest of the Wuyue Pumped Storage Power Generation Co. Ltd.
China Hydroelectric currently holds a 79 percent equity interest in Wuyue Company, which owns the right to develop a 1,000 MW pumped storage hydroelectric power project in Xinyang, Henan Province, China.
Under the framework agreement, subject to the completion of definitive documents, completion of due diligence and receipt of required governmental and other approvals in the PRC, China Hydroelectric will transfer a 51 percent equity interest in Wuyue Co. to Guangdong Nuclear, in exchange for which Guangdong Nuclear will agree to fund its proportionate share of the on-going development costs of the project.
The terms contained in the framework agreement, which may be terminated by either party prior to the execution of definitive agreements, will be spelled out in definitive agreements that the parties expect to be completed by the first quarter of 2011.
The Wuyue Project is located in Xinyang, Henan Province and will be used to supply renewable peaking power capacity to Guangshan County.
China Hydroelectric purchased a 79 percent equity interest in the Wuyue Pumped Storage hydroelectric project and established the Wuyue Pumped Storage Power Generation Co. on June 11, 2009 for $24.4 million with the intention of pursuing the development of the project with a strategic partner.
Since the acquisition, CHC has spent about $5 million for the development phase. The construction timeline would span about six years once ground breaking occurs.