Constellation Energy Group Inc. (CEG) has signed an agreement to
pay about $1.1 billion to buy the generating fleet from struggling
privately held Boston Generating LLC, pending bankruptcy-court
approval.
If the deal is approved, Constellation's bid would be the
so-called stalking horse bid, or the one other bidders would
ultimately have to beat in order to buy the assets.
The Baltimore utility company said the bid, if successful in an
auction later this year, would net it a 2,950-megawatt fleet, the
third-biggest power-generating portfolio in New England. Based on
the current bid price, Constellation would expect the deal to add
to its bottom line beginning next year. The company expects to
finance the deal through cash on hand and debt.
"This agreement is consistent with Constellation Energy's
previously stated intention to purchase physical generation assets
in regions where we have significant load obligations," said
Constellation Chairman and Chief Executive Mayo A. Shattuck
III.
Boston Generating has struggled with too much debt, and Standard
& Poor's Ratings Services said in July that the company was
likely to file for bankruptcy protection by autumn. In April, the
company announced a strategic sale process as part of efforts to
restructure the company.
Last month, Constellation said its second-quarter earnings
soared following prior-year divestiture losses, yet operating
returns for its retail energy business slipped.
Shares of Constellation closed at $30.25 on Friday and were
inactive premarket. The stock has fallen 14% so far this year.
-By Nathan Becker, Dow Jones Newswires; 212-416-2855;
nathan.becker@dowjones.com