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Beowulf Energy and Natural Gas Partners Complete Acquisition of Generating Assets From City of Vernon (California) in $288 Million Transaction

Posted on: Thursday, 10 April 2008, 15:01 CDT

Paul Prager, CEO of Beowulf Energy, and Natural Gas Partners ("NGP"), the leading investment franchise in the energy industry, have closed the previously announced acquisition of generating assets from the City of Vernon (California). The transaction, which is the third power transaction completed by Beowulf and NGP, follows on the acquisition of Bicent Holdings in July 2007 and the sale of Mountain View wind farm to AES in March 2008. The Beowulf/NGP partnership has completed approximately $1.1 billion of power acquisition and sale transactions since being formed nine months ago.

The business being acquired includes the 134 MW Malburg Generating Station and economic interests in the 22 MW Hoover Dam Uprating Project. Following the sale of Mountain View last month, affiliates of Bicent will now own and manage 692 MW of electric generating capacity located in Montana, Colorado, California and Georgia. All of the generating assets are contracted to investment grade power purchasers with an average credit rating of A-.

Colorado Energy Management, a Bicent subsidiary which provides design, construction, and operation and maintenance services to energy partners, will manage the operations and maintenance of the Malburg facility going forward.

Nazar Khan, Executive Vice President, Development and Acquisitions of Bicent, stated, "We are delighted by the prospect of partnering with the City of Vernon to provide low cost and reliable power to its primarily commercial and industrial customers for many years to come. The Malburg facility is a new, state of the art gas-fired combined cycle power plant that is consistent with our strategy of owning and operating best-in-class contracted power generating assets." Paul Prager added, "Our ability to close this transaction despite the challenging financing markets is a testament to the fundamental quality of the portfolio as well as the extraordinary efforts of our team, the City of Vernon, and our respective financial and legal advisors."

Scott Gieselman, Managing Director of Natural Gas Partners, said, "Paul Prager and the Beowulf team have continued to execute upon the strategy of building a high quality, diversified, non regulated power generation company. We continue to view this partnership as an excellent complement to our traditional oil and gas investment platform."

In addition to Mr. Prager, Chairman, CEO and President, the officers of Bicent are Douglas Halliday, Executive Vice-President and COO; Christopher Ryan, Executive Vice President and CFO; Nazar Khan, Executive Vice President, Development and Acquisitions; and Martin Wenzel, CEO of Colorado Energy Management. Prior to the acquisition of Bicent, Mr. Prager and his team were instrumental in the successful growth and subsequent sale of CES Energy Assets in a series of transactions to Direct Energy, Energy Investors Fund and J- Power. Mr. Prager also controls Trinity Power Ltd. ("Trinity"), which owns a 225 megawatt gas fired electricity generating facility located in the Republic of Trinidad & Tobago. Trinity enjoys a 30 year contract to sell electricity to T&TEC, the Trinidad state utility, and is subject to a further guarantee by the Trinidad government (S&P/Moodys rating: A-/Baa1).

Bank financing for the transaction was provided by Union Bank of California and Lehman Brothers Inc. provided the initial debt commitment to support the transaction.

Paul, Weiss, Rifkind, Wharton & Garrison LLP and Chadbourne & Parke LLP served as legal counsel to Mr. Prager and NGP. Simpson Thacher & Bartlett LLP served as counsel to the lenders.

Lehman Brothers Inc. is serving as financial advisor to the City of Vernon. Bond Logistix LLC is serving as the City's municipal financial advisor. Latham & Watkins LLP and KL Gates LLP are serving as legal counsel to the City.

About Paul Prager

A graduate of the U.S. Naval Academy, Mr. Prager has extensive experience in international shipping, commodity trading and power development. In 1985, Mr. Prager joined Salomon Brothers Inc. as a trader. In 1987, he founded and served as Managing Director of Davco Oil, a crude oil and crude product physical and derivatives trader. Since 1990, Mr. Prager has focused exclusively on the development, operation and ownership of energy facilities and maritime assets. Mr. Prager operates through his acquisition vehicle Beowulf Energy LLC. Mr. Prager currently serves as a member of the Board of the US Naval Academy Foundation.

About Natural Gas Partners

Founded in 1988, Natural Gas Partners manages over $7.2 billion in a family of funds that invests private equity capital in oil and gas production, midstream and oilfield service companies. The NGP platform consists of a series of nine private equity funds with cumulative commitments exceeding $6.9 billion since inception. The firm also manages $350 million in two co-investment funds that invest in direct oil and gas property interests alongside NGP portfolio companies. Natural Gas Partners is an affiliate of NGP Energy Capital Management, LLC, a $9.3 billion firm based in Irving, Texas that invests in all sectors of the energy industry.

Natural Gas Partners may be contacted at (972) 432-1440 or www.naturalgaspartners.com.

About Vernon

The City of Vernon is a chartered city of the State of California, consisting of approximately 5.2 square miles located southeast of downtown Los Angeles. The City is home to more than 1,800 mostly industrial businesses, providing primarily skilled labor positions to nearly 50,000 persons who live throughout the southeast region of Los Angeles County. The City has owned its electric system since 1933 and is the exclusive provider of electrical service to all property within the City boundary. The City will use the proceeds to complete its redemption of its auction rate bonds. This transaction will permit the City to continue its highly successful industrial development program to expand jobs in the region.

Source: Business Wire

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