June 18, 2008

PSEG Sells Power Assets in Chile for $1.2B


Public Service Enterprise Group said Tuesday that its PSEG Global unit has agreed to sell the SAESA Group of Companies in southern Chile to a consortium formed by Morgan Stanley Infrastructure and the Ontario Teachers' Pension Plan for more than $1.2 billion.

The sale is the latest in a series of divestitures of properties outside the United States by Newark-based PSEG, the parent of Public Service Electric and Gas Co., New Jersey's largest utility.

"PSEG has been seeking to decrease international exposure by being open to selling international assets when we can obtain strong valuations," Tom O'Flynn, chief financial officer of PSEG and president of PSEG Energy Holdings, said in a statement. "These companies have been well-run and are well-situated. It is no surprise that there was substantial interest in acquiring these assets."

The purchase price is about $870 million, but it could be adjusted based on the timing of the closing, which is expected in the third quarter of this year, Public Service said in a statement. In addition, the buyers will assume more than $400 million of SAESA Group debt.

PSEG said it expects to net about $600 million after paying Chilean and U.S. taxes, generating an after-tax gain of about $170 million to $180 million during 2008.

The company has not decided what it will do with the cash once the sale closes, according to a PSEG spokeswoman.

Last year PSEG Global sold its interests in electric distribution businesses in Chile and Peru, and its ownership interest in a Peruvian hydroelectric generation company.

Its remaining international assets consist of small investments in electric generation plants in Italy, India and Venezuela.

The SAESA Group consists of major electric distribution and transmission businesses with 639,000 customers in Chile and total of more than 135 megawatts of wind, hydro, diesel and gas electric generation capacity.


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