Talen looking to unload energy-contracting arm
AlLENTOWN — H.T. Lyons Inc., an Upper Macungie Township mechanical engineering contractor, is among 11 companies Talen Energy Corp. wants to sell.
For Talen, exploring a sale of its Energy Services unit is consistent with its strategy to divest non-core assets within its portfolio and focus on generating cash flow through its core power-generation business, the privately held company has said.
It’s also consistent with the plan Riverstone Holdings, which acquired Talen in December, laid out in a September filing with the U.S. Securities and Exchange Commission.
In that filing, Riverstone said its “operational strategy” for Talen is to focus on increasing cash flow, reduce “plant-level costs, corporate overhead and non-critical activities,” and evaluate the sale of “certain non-core assets” to increase liquidity and reduce debt.
Those changes, Riverstone said in the filing, could cut operating expenditures by $100 million a year and capital expenditures by an additional $50 million.
It’s unclear how much Talen will save if it sells Energy Services, but the business line appears to be relatively small, considering it last year accounted for $22 million of EBIDTA, which stands for earnings before interest, depreciation, taxes and amortization.
By comparison, Talen, as a company, reported adjusted EBITDA of about $1 billion in 2015, the last full year available for the company.
Founded in 1973, H.T. Lyons, which is at 7165 Ambassador Drive, is the largest mechanical contracting, engineering, maintenance and energy services firm in eastern Pennsylvania and New Jersey, according to its website. Lyons, as do all of Talen Energy’s contractors, sells such services as heating, ventilation and air conditioning construction and service.
It’s unclear how many people work at H.T. Lyons. A spokeswoman declined to comment, as did Talen Energy spokesman Todd Martin.
In 1997, a subsidiary of PPL Corp. bought H.T. Lyons during a period when utilities sought to increase their reach into energy-management services. The move happened as electric competition heated up in Pennsylvania, said Glenrock Associates analyst Paul Patterson, who covers the energy industry.
“It was supposed to mesh well with providing retail electric service,” said Patterson, who does not follow Talen. “It seemed it didn’t work out; it was not a good fit culturally with the electric-power area.”
Ever since PPL Corp. spun off its energy division in 2015 to form Talen Energy, the independent power-generation company has seen a trail of transition. Its CEO, Ralph Alexander, has assured area employees that the company’s headquarters will remain in Allentown, according to an email to employees that was obtained by The Morning Call. But the company has not said Talen would remain in its offices at The Plaza at PPL Center or move.