By Michael Kuser
Alberta-based Maxim Power announced it has closed a deal to sell its U.S. subsidiary and its five generation plants, concluding a two-year effort to stave off threats to the company’s survival.
Hull Street Energy, through its newly formed affiliate Milepost Power Holdings, paid $106 million for Maxim’s 447 MW of power generation assets in the U.S., or about $238,000/MW of generating capacity. Three of the plants are dual-fuel combined cycle plants in New England, and the others are simple cycle natural gas turbines in New Jersey and Montana.
In May 2015, Maxim reported that it had breached several financial covenants with its Canadian bank and that “significant doubt may exist with respect to the ability of the corporation to continue as a going concern.” The company said it was pursuing asset sales to improve its cash position.
The company’s outlook was not helped later in May 2015 when FERC accused it of manipulating the New England power market in a fuel-switching scheme (IN15-4). Under a consent agreement approved with FERC’s Office of Enforcement last September, Maxim agreed to pay a $4 million fine and disgorge another $4 million in earnings to ISO-NE, but it did not admit guilt. (See Maxim Power to Pay $8M to Settle Fuel-Switching Case.)
The same month, Maxim sold 176 MW of generation assets in France, its COMAX subsidiary, to an affiliate of Basalt Infrastructure for 47 million euro ($52.8 million at the time), about $300,000/MW.
Maxim said it will use $8 million (CAD) of the proceeds from the sale of its U.S. assets as collateral for letters of credit and $5 million (USD) to fulfill the settlement agreement with FERC. The company, which trades on the Toronto Stock Exchange, reported $2.2 million in net income on $94.5 million in revenue for 2016.
The assets acquired by Milepost are the 181-MW Pittsfield plant that FERC identified in the fuel-switching scheme; the 87.2-MW Forked River plant in Ocean County, N.J.; a 63.5-MW plant in Pawtucket, R.I.; the 62.1-MW CDECCA plant in Hartford, Conn.; and the 54.9-MW Basin Creek plant in Butte, Mont.