A joint venture of private equity funds, Blackstone and ArcLight Capital Partners, will pay around US$2.17 billion for the plants.
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The sale is slated to close in the first quarter of 2017. AEP said it expects to net $1.2 billion in cash after taxes, repayment of debt associated with the assets and transaction fees.
American Electric Power Company Inc has a P/E of 16 with a 52 week low of $53.30 and a 52 week high of $71.32 and has a market capitalization of $0.0. A natural gas plant in Waterford, will also be sold.
American Electric Power (NYSE:AEP) last announced its earnings results on Thursday, July 28th.
Bank of Montreal Can acquired a new position in shares of American Electric Power Co. Shares are up 9.9 per cent this year.
The sale includes plants in Cheshire, Waterford and Mount Sterling, Ohio, and Lawrenceburg, Ind.
AEP is also selling a natural gas plant in Lawrenceburg, Indiana.
Chief Executive Officer Nick Akins reported “robust interest” in generators up for sale earlier this month and said he hoped the process could be concluded soon. Eleven of the company’s 13 plants (a total 6.6 GW of capacity) were in OH, one in IL, and one in Pennsylvania.
“AEP’s long-term strategy has been to become a fully regulated, premium energy company focused on investment in infrastructure and the energy innovations that our customers want and need”, said CEO Nicholas Akins. “This transaction advances that strategy and reduces some of the business risks associated with operating competitive generating assets”. 7 equity analysts believe that the stock has a bright future and the price doesnt capture all of its upside, hence they rate the stock as a Strong Buy.
Blackstone and Arc Light Capital each own large power-generating facilities around the world, according to Melissa McHenry, director of external communications for AEP in Columbus. “The volatility of the power business is more suited to a private equity firm than a publicly traded utility where the investors really prefer stability, visibility of earnings and dividends”.
AEP says it is evaluating options and will share details about its plans for investment of the proceeds from the sale at a November 1 analyst day. Strategic evaluation of 2,677 megawatts of competitive generation in OH continues, according to the statement. He added that the company would likely sell the nine generating units in OH covered in the blocked PPAs and other remaining plants if state lawmakers don’t act on reforms.
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Efforts to formalize a power purchase agreement that would have supported continued operation of AEP and FirstEnergy generation capacity in Ohio were punctured by the Federal Energy Regulatory Commission (FERC) on April 27, though the Public Utilities Commission of Ohio (PUCO) had blessed the deal just a month before.
