Calpine Corp. (NYSE:CPN) has agreed to purchase a nominal 1,050 MW, combined-cycle power plant for $625m, or approximately $595 per kilowatt, exclusive of adjustments relating to development rights and working capital, from MinnTex Power Holdings LLC.
MinnTex is a portfolio company owned by a private investment fund managed by Wayzata Investment Partners LLC. The natural gas-fired plant is located in Guadalupe County, 30 miles northeast of San Antonio, Texas.
“Guadalupe is an exceptional plant with an outstanding performance record that meets Calpine’s high standards for operational excellence,” said Calpine CEO Jack Fusco in a Dec. 2 statement. “We strongly believe in the potential of the Texas market as electric demand increases and reserve margins tighten. Acquiring this modern, flexible and efficient plant in ERCOT’s south zone at a discount to replacement cost furthers our strategic objectives in this key market. The Guadalupe acquisition exemplifies our commitment to making disciplined capital allocation decisions that will enhance shareholder value.”
Located on a 110-acre site, the Guadalupe plant includes two 525-MW generation blocks, each consisting of two General Electric 7FA combustion turbines, two heat recovery steam generators and one GE steam turbine. The purchase also includes rights to an advanced development opportunity for an approximately 400-MW quick-start, natural gas-fired peaker, if market conditions warrant.
Calpine said it is targeting a transaction close in the first quarter of 2014 and expects to fund the transaction with cash on hand. The transaction is subject to customary closing conditions, antitrust review under the Hart-Scott-Rodino Act, and approval by the Public Utility Commission of Texas.
Calpine generates more electricity than any other independent power producer in America, with a fleet of 93 power plants in operation or under construction, representing more than 28,000 MW capacity.
Based in Wayzata, Minn., with branch offices in Boston, Houston, London, Singapore, and Mumbai, Wayzata Investment Partners is an SEC-registered investment adviser to private investment funds with in excess of $7bn in assets under management.
In 2012 Calpine bought an 800-MW gas plant in Bosque County, Texas, for $432m plus adjustments, or $540 per kilowatt.