Ecopetrol reports the extension of the exclusivity period in connection with the potential acquisition of 51.4% stake in Interconexión Eléctrica S.A. - ISA and gives an update on the financing sources

Rhea-AI Summary

Ecopetrol S.A. has extended its Exclusivity Agreement with the Colombian Ministry of Finance regarding the acquisition of a 51.4% stake in Interconexión Eléctrica S.A. (ISA) until August 31, 2021. The decision not to condition the acquisition on an equity offering is supported by improved financial conditions, allowing for a credit facility from international banks. Ecopetrol plans to continue exploring financing options for its energy transition strategy, including potential equity issuance and debt transactions.

Positive

• Improved financial conditions allow acquisition financing through credit facilities rather than equity offering.
• Continued exploration of structural financing initiatives for energy transition strategy.

Negative

• None.

BOGOTÁ, Colombia, June 24, 2021 /PRNewswire/ -- Ecopetrol S.A. (BVC: ECOPETROL; NYSE: EC) informs that the Exclusivity Agreement signed with the Ministry of Finance and Public Credit ("MHCP") on February 12, in connection with Ecopetrol's potential acquisition of MHCP's 51.4% stake in Interconexión Eléctrica S.A. ("ISA"), has been extended until August 31, 2021. The exclusivity agreement provides the framework through which the negotiation process and due diligence activities for the potential acquisition have been ongoing.

Moreover, Ecopetrol has informed the MHCP of its decision of not conditioning the closing of ISA's acquisition to an equity offering. This decision relies on the favorable evolution of the financial situation of Ecopetrol Group, which provides the flexibility to achieve the closing of the ISA transaction through a credit facility with international banks, and aligned with the leverage parameters established in the Company's business plan. The disbursement of such credit facility would be subject to the closing of the ISA transaction.

Notwithstanding the above, the Company will continue working on structural financing initiatives for the energy transition strategy, such as an equity issuance and/or the execution of medium and long-term debt transactions, under favorable market conditions.

Ecopetrol is the largest company in Colombia and one of the main integrated oil and gas conglomerates in Latin America, with more than 13,000 employees. It accounts for more than 60% of the hydrocarbon production in Colombia, and it owns the largest refineries and most of the country's oil-pipelines and multi-purpose pipelines network. It also participates in the commercialization of energy and in the distribution of gas. At the international level, Ecopetrol focuses on strategic basins on the American continent, with E&P operations in the United States (the Permian basin and the Gulf of Mexico), Brazil and Mexico. This press release contains statements relating to business prospects, estimates of operating and financial results, and Ecopetrol's growth prospects. All are projections, and therefore are based solely on management's expectations of the company's future and its continuous access to capital to finance its sales plan. Achieving these estimates in the future depends on its performance under given market conditions, regulations, competition, the performance of the Colombian economy and industry, and other factors; therefore, they are subject to change without prior notice.

For further details, please contact:

Head of Capital Markets
Tatiana Uribe Benninghoff
Phone: +571-234-5190
Email: investors@ecopetrol.com.co

Media Engagement (Colombia)
Jorge Mauricio Tellez
Phone: + 571-234-4329
Email: mauricio.tellez@ecopetrol.com.co

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SOURCE Ecopetrol S.A.

FAQ

What is Ecopetrol's stake in ISA?

Ecopetrol is seeking to acquire a 51.4% stake in Interconexión Eléctrica S.A. (ISA).

When was the exclusivity agreement with MHCP extended?

The exclusivity agreement was extended until August 31, 2021.

Why is Ecopetrol not requiring an equity offering for the ISA acquisition?

Ecopetrol's decision is based on favorable financial conditions that permit financing through credit facilities.

What are Ecopetrol's future financing plans?

Ecopetrol plans to explore equity issuance and medium to long-term debt transactions under favorable market conditions.

How significant is the ISA acquisition for Ecopetrol?

The acquisition is strategically significant as it aligns with Ecopetrol's energy transition goals.