31 Jan 2014 Cases

Compass Lexecon assists PCA Tribunal in determining fair compensation for Bolivia nationalization

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A Compass Lexecon team, led by Manuel A. Abdala as expert, successfully assisted Guaracachi America Inc. (GAI) and Rurelec PLC (“Claimants”), in determining damages based on the fair market value for their 50% equity stake in Empresa Eléctrica Guaracachi S.A. (EGSA), a 200 MW conglomerate of various power plants located in Bolivia. The Claimants’ equity had been nationalized without compensation in May 2010. The January 2014 award by a PCA Tribunal granted compensation of over US$ 35 million, which was settled with a payment by Bolivia of US$ 31.5 million in early June 2014. Whereas the opposing expert opined that EGSA’s equity was worthless, Dr. Abdala showed that, despite operating in a low-price regulated environment, expected supply and demand conditions in Bolivia’s wholesale electricity market would have enabled EGSA to generate sufficient cash flows not only to repay its financial debt, but also to generate positive value to its shareholders. Dr. Abdala was assisted by Marcelo Schoeters, Julián Delamer, Gustavo De Marco, Federico Villar, Ivan Santilli and Daniela Repetto. Compass Lexecon was retained by counsel to Claimants, which included Nigel Blackaby, Noah Rubins and Lluís Paradell from Freshfields Bruckhaus Deringer LLP.

A new version of Compass Lexecon is available.