Hidrotermica S.A.

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The Brazilian company Hidrotermica, a wholly-owned subsidiary of Grupo Bolognesi, was granted authorizations by the regulatory agency ANEEL to build nine small hydro power plants located in the state of Rio Grande do Sul (102 MW in total capacity). The 30-year contracts were signed with the regulatory agency ANEEL over the years since September 2002, and special purpose companies were created to manage each project. In September 2002, the first two contracts were signed for the 28-MW Jararaca Small Hydro Power Plant (PCH Jararaca) and for 26-MW Da Ilha Small Hydro Power Plant (PCH Da Ilha), both located at the Prata River. The total investment committed to these plants was US$ 116.4 million (BRL 227 million). Financial closure for these projects were reached in January 2007, when the state-owned bank BNDES approved a US$ 80 million (BRL 156 million) loan to Bolognesi. The units became operational in 2008. In December 2003, another two contracts were signed for the 24-MW Criuva Small Hydro Power Plant (PCH Criuva) and for 24-MW Palanquinho Small Hydro Power Plant (PCH Palanquinho), both located at the Lageado Grande River. The total investment committed to these plants was US$ 120 million (BRL 240 million). Financial closure for these projects was reached in April 2009, when the state-owned bank BNDES approved US$ 90.6 million (BRL 181.2 million) in syndicated loans. The units became operational in 2010. Hidrotermica had other five contracts signed with ANEEL to build additional power plants, but, as of December 2009, these projects were in the early stages of implementation and had not reached financial closure yet (PCH Autodromo, PCH Boa Fe, PCH Quebrada Funda and PCH Sao Paulo, all located in the state of Rio Grande do Sul; PCH Quartel, located in the State of Minas Gerais). In March 2011, financial closure was achieved for two other power plant: - PCH Autodromo (24 MW): a US$ 48.7 million (BRL 79.5 million) loan was granted by BNDES to finance the project, whose investment commitment was estimated at US$ 56.3 million (BRL 112.5 million). - PCH Boa Fe (24 MW): a US$ 48.5 million (BRL 79.2 million) loan was granted by BNDES to finance the project, whose investment commitment was also estimated at US$ 56.3 million (BRL 112.5 million). In October and November 2011, PCH Boa Fe and PCH Autodromo commenced commercial operations, respectively. PCH Sao Paulo became operational in April 2012. PCHs Jararaca, Da Ilha, Criúva and Palanquinho signed power purchase agreements arranged with the state-owned company Eletrobras for 20 years through the Brazilian Federal program PROINFA (incentive program for alternative power generating companies).