On March 16, the Federal Energy Regulatory Commission approved the sale of a 512-MW, gas-fired power plant in New Jersey to an affiliate of Macquarie Group Ltd.
On Feb. 12, Bayonne Energy Center LLC (BEC) and Zone J Tolling Co. LLC requested authorization for a transaction that will result from the transfer of 100% of the indirect equity ownership interests in these applicants from PER Development Holdings LLC, a wholly-owned subsidiary of ArcLight Energy Partners Fund III LP, to Ragfy Holdings LLC.
BEC owns and operates the Bayonne Energy Center, a 512-MW natural gas-fired plant located in Bayonne, New Jersey. While the facility is located within the footprint of PJM Interconnection, it is not interconnected to the PJM grid. It is solely interconnected to the transmission system owned by Consolidated Edison Co. of New York and operated by the New York Independent System Operator (NYISO) via a 6.75-mile, 345-kV submarine cable that is a dedicated generator lead line for the facility.
BEC is an exempt wholesale generator with market-based rate authority. The entire output of the facility is currently sold pursuant to long-term tolling agreements. Direct Energy Business Marketing LLC, an unaffiliated third party, is the counterparty to two long-term tolling agreements that convey control over 320 MW from the facility to Direct Energy. The remaining capacity of the facility is sold under two long-term tolling agreements with Zone J Tolling.
Zone J Tolling operates as a power marketer, with market-based authorization solely within the NYISO market, including the New York City Submarket. Other than through the tolling agreements with BEC, Zone J Tolling does not own or control any generation capacity. BEC and Zone J Tolling are wholly-owned indirect subsidiaries of Al Bayonne Holdings LLC, which is currently a wholly-owned direct subsidiary of PER Development. PER Development is a wholly-owned subsidiary of ArcLight Fund III. ArcLight Fund III is managed by equity investor ArcLight Capital Partners LLC.
Ragfy Holdings is an indirect wholly-owned subsidiary of Macquarie Infrastructure Co. LLC (NYSE: MIC). MIC is externally managed by a wholly-owned indirect subsidiary of Macquarie Group Ltd. (MGL). MGL is a global provider of banking, financial, advisory, investment, and funds management services. MGL is not affiliated with any inputs to electricity products or electric power production located in the NYISO BAA.
Under the now-approved transaction, PER Development will transfer 100% of the direct membership interests in Al Bayonne to Ragfy Holdings. As a result, the applicants will be wholly-owned indirect subsidiaries of Ragfy Holdings. Neither PER Development nor ArcLight Fund III will hold any ownership interests in the tpplicants following the close of the proposed transaction.
Said the March 16 FERC approval: “The Proposed Transaction is authorized upon the terms and conditions and for the purposes set forth in the Application.”
Incidentally, MIC on Feb. 24 announced a public offering of 4,375,000 interests, or shares, by the company. In connection with the offering of shares, MIC will grant the underwriters a 30-day option to purchase up to an additional 656,250 shares to cover over-allotments, if any. The offering will be made under the company’s existing shelf registration statement filed with the Securities and Exchange Commission in April 2013, as amended.
MIC said it expected to use the net proceeds from the offering to finance the cash consideration for the acquisition of the assets of Bayonne Energy Center and for general corporate purposes. The company expects the transaction to close in the first half of 2015, subject to regulatory approval and satisfaction of customary conditions precedent.
MIC owns, operates and invests in a diversified group of infrastructure businesses providing basic services to customers in the United States. Its businesses consist of a bulk liquid terminals business, International-Matex Tank Terminals, an airport services business, Atlantic Aviation, a gas processing and distribution business, Hawaii Gas, and several entities comprising a Contracted Power and Energy segment.