Constellation Energy to Explore Sale of Gas-Fired Generation Plants
June 06 2006 - 7:00AM
PR Newswire (US)
BALTIMORE, June 6 /PRNewswire-FirstCall/ -- Constellation Energy
(NYSE:CEG) today announced that it has engaged advisors to explore
the sale of 3,145 MW natural gas-fired generating plants. The
generating assets include the company's High Desert, Rio Nogales,
Holland, University Park, Big Sandy and Wolf Hills plants. These
merchant assets are located in California, Texas, Illinois, West
Virginia and Virginia, respectively. Of these assets, the High
Desert plant in Victorville, Calif. currently has a tolling
contract with the California Department of Water Resources that
expires in 2011. "Physical assets have been and will continue to be
at the core of our overall business strategy," said Mayo A.
Shattuck III, chairman, president and chief executive officer of
Constellation Energy. "However, in the current market environment
our gas-fired assets offer fewer synergies to our competitive
supply portfolios, than our base load coal and nuclear assets. "Our
employees have been able to optimize the performance of these
assets, and with gas-fired assets trading at attractive values and
a limited supply of plants of this caliber available for sale, we
believe it to be an appropriate time for Constellation Energy to
consider the divestiture of these assets," Shattuck said. "We have
a broad array of investment opportunities available and if an
attractive value can be realized from this effort, we would look to
redeploy this capital in investments more closely aligned with our
strategy." Constellation Energy believes this effort in the
aggregate will enhance capital returns. Consistent with the
company's prior practice, proceeds will be applied to debt
reduction. Based on the company's estimate of the market value of
the plants, Constellation Energy should be at its target leverage
ratios upon completion of the divestiture. After the sale is
complete, 2007 free cash flow would then be fully available for
reinvestment in the business or for the repurchase of shares. In
total, we expect the sale of plants, earlier attainment of targeted
leverage levels, and availability to begin to fully reinvest free
cash flow in the business, to be modestly dilutive in 2007 and
accretive in 2008. If market conditions remain favorable, the
company expects the transaction to be concluded in 2006.
Constellation Energy (http://www.constellation.com/), a FORTUNE 200
company with 2005 revenues of $17.1 billion, is the nation's
largest competitive supplier of electricity to large commercial and
industrial customers and the nation's largest wholesale power
seller. Constellation Energy also manages fuels and energy services
on behalf of energy intensive industries and utilities. It owns a
diversified fleet of more than 100 generating units located
throughout the United States, totaling approximately 12,000
megawatts of generating capacity. The company delivers electricity
and natural gas through the Baltimore Gas and Electric Company
(BGE), its regulated utility in Central Maryland. DATASOURCE:
Constellation Energy CONTACT: Media - Robert L. Gould,
+1-410-234-7433, Investor - Kevin Hadlock, +1-410-783-3647, both
for Constellation Energy Web site: http://www.constellation.com/
Company News On-Call: http://www.prnewswire.com/comp/084087.html
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