Talen Energy Agrees to Sell Three Pennsylvania Power Plants
ALLENTOWN, Pa., Oct. 8, 2015 /PRNewswire/ — Talen Energy Corporation (NYSE: TLN) announced Thursday (10/8) that it has agreed to sell three Pennsylvania power plants with a total combined generating capacity of 996 megawatts for $1.51 billion in gross cash proceeds, subject to customary purchase price adjustments.
The sale of the Ironwood combined-cycle, natural gas-fired plant, and the separate sale of the Holtwood and Wallenpaupack hydroelectric projects, are part of a requirement to divest certain assets in specific regions of the PJM Interconnection, which include portions of eastern Pennsylvania, New Jersey and Maryland, to comply with a December 2014 Federal Energy Regulatory Commission order approving the transactions that formed Talen Energy.
The 704-megawatt Ironwood plant is being sold to a subsidiary of TransCanada Corporation (TSX, NYSE: TRP) (TransCanada) for a total purchase price of $654 million, subject to customary purchase price adjustments. In connection with the transaction, Talen Energy expects to repay approximately $42 million of indebtedness, plus a customary pre-payment premium, associated with the facility.
The Holtwood and Lake Wallenpaupack hydroelectric projects, with a combined generating capacity of 292 megawatts, are being sold to a subsidiary of Brookfield Renewable Energy Partners L.P. for $860 million, subject to customary purchase price adjustments.
“We have made substantial improvements during our ownership of Ironwood, and appreciate the efforts of the dedicated employees who have operated and maintained the plant very well. We are pleased that we will be conveying ownership to TransCanada, a large and diversified energy company with extensive plant operating experience,” said Paul Farr, Talen Energy President and Chief Executive Officer.
“Brookfield Renewable Energy Partners is an experienced owner and operator of hydroelectric projects and has extensive operations across North America, including the Safe Harbor hydroelectric project on the Susquehanna River just upstream from Holtwood. We recognize and appreciate the dedicated employees who operate, maintain and support the hydro plants. They have done an outstanding job, and their skill and experience will prove invaluable to Brookfield in continuing the legacy of operating excellence and citizenship at both facilities,” Farr said.
The transactions are expected to result in net proceeds of approximately $1.16 billion. In the near term, Talen Energy plans to use proceeds of the transactions to retire pre-payable and maturing debt.
Ironwood, Holtwood and Wallenpaupack would have been expected to contribute Adjusted EBITDA and Adjusted Free Cash Flow on a full-year 2016 basis of approximately $140 million and $80 million, respectively, and Net Income and Cash from Operations on a full-year 2016 basis of approximately $56 million and $101 million, respectively.
Both transactions are expected to close in the first quarter of 2016, following the receipt of necessary regulatory approvals and other customary closing conditions.