Cox’s jump to the Continuous Market will be accompanied by an investment effort of around 403.46 million euros in its different business lines. As highlighted in the document sent to the CNMV prior to its listing, the firm led by Enrique Riquelme plans to disburse 285 million euros (between 265 and 305 million) in different opportunities related to water concessions and the expansion of its Moroccan desalination plants; in addition to another 38.46 million in the transmission lines business for which it has been awarded and other potential contracts; and 80 million in energy generation projects.
Among these development plans, the expansion of two of the largest desalination plants in Africa, managed by Société d’Eau Déssalée d’Agadir (SEDA) and Aman El Baraka (AEB), controlled by Cox, stands out. As detailed, the company is in negotiations with the water and agriculture regulators of Morocco – Office National de l’Electricité et de l’Eau potable of Morocco (ONEE) and Office Régional de Mise en Valeur Agricole du Tafilalet (ORMVA) – for the extension of both floors by 100 million euros. Of these, approximately 80% would correspond to public investment, while the remaining amount, about 15 million euros; will be contributed by Cox.
With these measures, the firm expects that the two facilities will reach a production capacity of 200,000 cubic meters of water per day, compared to a capacity of 150,000 m3 in SEDA and 125,000 m3 in AEB.
Cox’s relationship with Morocco also goes beyond the industrial. Among the investors who have committed capital for its IPO are various Arab investors, including the Dubai-based fund AMEA Power or Attijariwafa Bank, the first financial group in Morocco property of Al Madaone of the largest venture capital funds in Africa. This institution will support Cox’s IPO with 5 million euros.
The Agadir project will be one of the spearheads in the engineering company’s growth strategy. The gross result -ebitda- until June 2024 totaled 81 million eurosto which the Moroccan facilities contributed 13.4 million euros -close to 16%-. The firm’s long-term strategy contemplates the business continuing to boom, with the water segment going from representing 26% of EBITDA to more than half in the coming years. Likewise, it also seeks to give a boost to the energy services and transmission segments, to leave behind their dependence on generation (which, currently, represents the 66% of the company’s gross profit).
The total investments in which Cox will be immersed exceed 14,321 million euros between operations already tendered and under study between 2023 and 2027, out of a total of 72,916 million euros that the company has located as investment opportunities.
The two areas where tenders have the most impact are in the engineering and construction of transmission lineswhich amounts to 2,987 million euros and in that of energy generationon which you have bid 1,604 million euros until 2027.
Claims 355 million from Ghana for breaching a contract
The document presented by the firm led by Enrique Riquelme also includes an arbitration that began on October 23 in which Cox, together with Standard Bank of South Africa (SBSA), claims up to 330 million euros to Ghana for breach of a series of contracts and guarantees linked to a Cox desalination plant in the city of Accra.
The award has its origins in the fact that Befesa SPV, the company that manages it, has not been able to meet a series of reimbursements scheduled under the financing debt of the project with the SBSA and Nedbank for a total amount of 28.49 million euros.
The debt is secured by various assets and agreements, and they also have insurance that covers political and default risks. The maximum insurance coverage CRUMB -the World Bank guarantee system- is 61.5 million dollars, although its coverage will not be activated until a favorable ruling is obtained. As reported, Cox has been trying to restructure outstanding debts since the middle of last year.
The plant operates under the protection of the Ghana water company (called GWCL), and the firm would not have updated the water fee based on inflation, which in Ghana grew by 54.1% in 2022 and 23.2 % in 2023, which has affected Cox’s cash flow generation. Therefore, Befesa SPV and SBSA have initiated legal proceedings against GWCL and Ghana to claim losses due to breach of agreement.
If a settlement is not reached or Cox does not win the case, lenders could take steps that could result in the loss of the desalination plant.
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