By Peter Key
NRG Energy on Wednesday said it has agreed to sell several of its businesses in transactions that will bring the company $2.8 billion in cash and take $7 billion in debt off its books.
The deals, which NRG expects to close in the second half of the year, involve its renewables businesses, its interest in NRG Yield and its South Central Generating subsidiary.
The sales, which require numerous regulatory approvals, are part of the transformation plan that NRG launched last July in response to pressure from hedge fund Elliott Management and private investment firm Bluescape Energy Partners, which a year ago revealed they owned a 9.4% stake in NRG and said they believed its shares were “deeply undervalued and that there exist numerous opportunities to significantly increase shareholder value, including operational and financial improvements as well as strategic initiatives.”
NRG expects to announce more sales over the course of the year and is revising its total asset sales cash proceeds target under the plan to $3.2 billion.
Global Infrastructure Partners (GIP) agreed to buy NRG’s controlling stake and 46% interest in NRG Yield, as well as its renewable development and operations and maintenance businesses, for $1.375 billion in cash.
GIP is a $40 billion private equity fund that “makes equity investments in high quality infrastructure assets in the energy, transport and water/waste sectors where we possess deep experience and strong relationships,” according to the company’s website.
“We view each of the three acquired businesses — the [NRG Yield] stake, the O&M business and the development business — as highly complementary and well positioned to capitalize on the increasing market demand for low-cost, clean energy,” GIP Chairman Adebayo Ogunlesi said in a statement.
The sale is subject to antitrust review under the Hart-Scott-Rodino act and must be approved by FERC, the U.S. Department of Energy, the California Public Utilities Commission, the Connecticut Public Utilities Regulatory Authority and the Pennsylvania Public Utility Commission.
As part of the deal, NRG also has agreed to sell two assets to NRG Yield for about $407 million: the 527-MW Carlsbad Energy Center, a natural-gas fired power plant in Carlsbad, Calif., scheduled to come online by the end of the year, and the 154-MW Buckthorn Solar farm in Pecos County, Texas.
Additionally, NRG will sell its South Central business to Cleco Corporate Holdings for $1 billion in cash. The South Central unit owns and operates 3,555 MW in generation assets consisting of a 75% stake in the 300-MW Bayou Cove natural gas plant in Jennings, La.; the 430-MW Big Cajun-I natural gas plant in Jarreau, La.; the 1,461-MW Big Cajun-II coal and natural gas plant in New Roads, La.; the 1,263-MW Cottonwood natural gas plant in Deweyville, Texas; and the 176-MW Sterlington natural gas plant in Sterlington, La. NRG will lease back the Cottonwood plant through May 2025.
That sale is also subject to antitrust review and must be approved by FERC, the Committee on Foreign Investment in the United States and the Louisiana Public Service Commission.
Cleco Sees Big Growth from NRG Acquisition
Eric Schouest, vice president of marketing-South for Cleco Power, told the Gulf Coast Power Association’s MISO South regional conference in New Orleans on Thursday that his company’s acquisition includes full service wholesale power supply contracts for nine Louisiana cooperatives, five municipalities in Arkansas, Louisiana and Texas, and one investor-owned utility. “We serve about 23 of the 64 parishes in the state of Louisiana. It adds about 23, 24 new ones,” he said.
Rich Heidorn Jr. contributed to this article.