Calpine Corp. announced that it has agreed to sell six power plants in its Southeast region to LS Power for $1.57 billion in cash, subject to working capital and other adjustments.
The portfolio of assets comprises 3,498 megawatts of combined-cycle generation capacity in Oklahoma, Louisiana, Alabama, Florida and South Carolina.
Combined cycle is the cleanest form of natural gas generation. Calpine is building a combined cycle natural gas powered generating plant in Dover. It also operates a gas-fired generator in Edgmoor, near Wilmington. A combined cycle natural gas plant is also slated to be built by Old Dominion Electric Cooperative in Cecil County, about 25 miles west of Newark.
“Today’s announcement represents substantial progress toward the achievement of one of our top strategic priorities – the monetization of our Southeast portfolio,” said Calpine’s CEO Jack Fusco. “This transaction enables us to capture that value for our shareholders today, to accelerate the usage of our net operating losses and to deliver meaningful Adjusted Free Cash Flow Per Share accretion. Consistent with our track record, we will continue to be opportunistic in our deployment of the capital generated from this sale, whether paying down debt, investing in acquisition or development opportunities or repurchasing our own shares of common stock,” added Fusco. “Meanwhile, I want to thank the talented professionals at these plants for their dedication to operational excellence that has helped advance Calpine toward its vision of being the premier power generation company in the United States.”
Calpine expects to use existing federal and state net operating losses to almost entirely offset the projected taxable gains from the sale. In addition, none of the assets included in the transaction are directly encumbered with project debt. The transaction is expected to result in net cash proceeds of approximately $1.53 billion.
