Black Hills Corporation Announces Agreement to Sell Seven Independent Power Plants
Published May 1st, 2008
Following a multi-month strategic review and auction process, Black Hills Corporation today announced it has entered into a definitive agreement with affiliates of Hastings Funds Management Ltd (Hastings) and IIF BH Investment LLC, a subsidiary of an investment entity advised by JPMorgan Asset Management (IIF), to sell seven independent power production (IPP) gas-fired plants with a total capacity of 974 megawatts for $840 million cash, subject to certain working capital adjustments.
Under the terms of the agreement, the Company has the right to retain ownership of the Fountain Valley power plant in Colorado in the event closing conditions for the Company’s planned acquisition of utility assets from Aquila are not met. The purchase price for the Fountain Valley plant represents $240 million of the total $840 million purchase price. The closing of the IPP sale, pending customary regulatory approvals, is expected to occur late second quarter or early third quarter of 2008.
David R. Emery, Chairman, President and CEO of Black Hills Corporation, said, “Our process was comprehensive and we believe this transaction produces the best result for our shareholders. The Hastings and IIF funds have a strong track record of managing infrastructure assets globally and are pleased to be acquiring a well-run, contracted generation portfolio in a high growth part of the country. The net proceeds from the pending IPP sale are expected to eliminate or reduce our need to issue equity to finance the pending Aquila purchase. While we remain confident that the Aquila transaction will close, having the flexibility to retain the Fountain Valley plant ensures access to a continued source of strong cash flow and earnings.
“At this time, we are not in a position to disclose the amount of net cash proceeds from the sale or the potential income tax effects,” Emery said. “We expect to provide additional information when we update our 2008 earnings guidance upon the completion of this IPP divestiture and the purchase of Aquila utility properties.”
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