IFM Acquires Allco’s 37.6% Equity in the Con Edison Electricity Generation Portfolio
NEW YORK, Feb. 25 /PRNewswire/ — Industry Funds Management Pty Ltd (“IFM”) announced today that it had reached agreement with Allco Finance Group (“Allco”) to take over Allco’s equity position in the purchase of the Consolidated Edison Inc. (“Con Edison”) generating assets.
IFM and Allco had announced on December 10, 2007 that they had entered into purchase agreements with Con Edison to acquire a portfolio of gas-fired electricity generating plants (supplemented with a small number of hydro generators) in the North East United States, with an aggregate generating capacity of 1,706 MW (“the Transaction”). The total cash purchase price payable to Con Edison for the business is $US1.447 billion. Con Edison is one of the largest utilities in the United States. Background information on the Transaction is in Attachment 1.
The purchase will be completed by a newly created company called the North American Energy Alliance LLC (“NAEA”). NAEA was originally structured as a joint venture between IFM, on behalf of IFM International Infrastructure (“the Fund”), and Allco.
Allco’s shares were suspended on the Australian Stock Exchange on 13 February 2007, following a trading halt two days earlier. Following the suspension, Allco approached IFM to request that they be released from their obligations within the Transaction and to transfer all their NAEA equity to the Fund.
Agreement for this arrangement has now been reached with an agreed, partially deferred settlement payable by Allco to the Fund of US$63 million, in addition to the transfer of Allco’s equity in NAEA. As a result, the Fund’s equity holding in NAEA has increased from 62.4% to 100%.
IFM expressed confidence that the deal will close around mid 2008 and that the required transition work will continue smoothly and on schedule. The acquisition continues to be subject to outstanding Federal and State regulatory approvals.
Dunia Wright, IFM’s Head of US and Europe, said:
“Whilst we are disappointed to lose Allco as a partner, we are pleased to have increased our investment in the Con Edison portfolio at an attractive price. Our additional ownership in the Transaction demonstrates the significant capability of IFM in the infrastructure equity space, in particular in the growing United States market.”
“We will continue NAEA’s commitment to maintain and improve the already strong and positive relationship the business enjoys with its key stakeholders including management, employees, union leadership, customers and the communities in which these power plants operate.”
About IFM
IFM is an investment management company specialising in the management of private investment products across infrastructure, private equity, debt investments and listed equity portfolios. IFM currently manages over US$15.0 billion in its related products and services.
IFM has been an investor in infrastructure assets since 1995 and has completed 46 transactions in that 13 year period with US$6.0 billion now invested in the sector. Within the United States, IFM International Infrastructure has a direct investment in Duquesne Light Holdings and the Colonial Pipeline Company. IFM is owned by Industry Super Holdings Pty Ltd, the holding company for the Members Equity group of companies, which in turn is owned by forty major Australian not-for-profit superannuation funds.
Attachment 1
The Con Edison portfolio comprises 29 individual generating units with an aggregate capacity of 1,706 MW. The power stations are located in New Hampshire, Massachusetts, New Jersey and Maryland, placing all of them in the capacity-constrained North Eastern United States power market. The portfolio involves a range of generators with a mixture of baseload intermediate and peaking plants powered by natural gas. Additionally, a smaller component of the portfolio consists of hydro electric generators. All of the plants in the portfolio are modern efficient plants with low capex requirements. Expansion opportunities for additional generating capacity exist, and are potentially in the order of 1,000 MW. The rights to realise the identified growth opportunities will remain with NAEA.
The assets acquired include: — Newington Energy LLC is a nominal 535 MW, combined cycle, dual fuel merchant facility located in Newington, New Hampshire located north of the city of Portsmouth on approximately 20 acres of land. It operates within the service territory of Public Service of New Hampshire, New Hampshire’s largest electrical utility, within an industrial area. — Consolidated Edison Energy Massachusetts Inc (“CEEMI”) comprises 185 MW of generation capacity consisting of hydroelectric facilities, gas turbines and thermal (steam, turbine and boiler combination) units located in Western Massachusetts in the NEEPOOL power market. — CEEMI Expansion was established by Con Edison, a division (not a distinct legal entity) of CEEMI for the purpose of expanding the existing West Springfield Station electricity capacity. — Lakewood is a nominal 246 MW combined facility located on 40 acres in Lakewood, New Jersey, and operates within the Eastern Mid-Atlantic Area Council region. Con Edison holds 80% of the ownership interests in this facility, with Osaka Gas holding the remaining 20%. NAEA is acquiring only Con Edison’s ownership in the facility. — Ocean Peaking is a nominal 351 MW peaking facility located on 15.8 acres in Lakewood, New Jersey, and operates within the Eastern Mid-Atlantic Area Council region of PJM. — Rock Springs is a nominal 352 MW peaking facility located in Rising Sun, Maryland which falls in the Reliability First Corporation Region Reliability council, one of the eight regions under the North American Electric Reliability Corporation.
NAEA plans to retain current staffing and operating agreements across the portfolio.
Industry Funds Management (US), LLC
CONTACT: Dunia Wright, Head of US and Europe, Industry Funds Management(US), LLC, +1-212-575-1055, dwright@ifm.net.au
Web site: http://www.ifs.net.au/