Mexico’s Grupak acquires Igsapak for electricity self-supply

The deal will allow Grupak to ensure the supply of energy to its plant and optimize and give continuity to the production and supply of energy to the self-supplied partners, including Grupak as one of the partners and clients of the Target.

With all of Igsapak Cogeneración’s assets leased from a related party through a sale and lease agreement, the deal was structured considering a sophisticated tax strategy that allowed Igsapak to reacquire those assets without increasing the acquisition price, despite the fact that shareholders’ equity increased significantly.

In parallel, the deal required the termination of a loan agreement, and the guarantee trust of such loan to release the company's shares and other assets. The deal also required Igsapak to renew its permits to act as a co-generator of energy.

Grupak’s business depends on the electric energy supply agreement entered into with Igsapak, considering the special transmission tariffs offered under the cogeneration certification.

While negotiating the main transaction documents, the two parties also had to negotiate and execute a facility agreement between Grupak and Target to provide working capital, acquire new turbines to reactivate energy supply to self-supplying partners, renew all material permits and negotiate, pay, and terminate the credit agreements with banks and reverse the ownership over the shares and assets of Igsapak.

Mexican law firm Von Wobeser y Sierra advised Grupak on the transaction and all related aspects, with a team led by partner Alejandro Orellana, with partners Fernando Carreño, Ariel Garfio, Alejandro Torres, Adrián Magallanes and Rodolfo Trampe, and senior associate Manuel Martínez and junior associate Ximena Ledezma.