Luminant announced Nov. 27 that it has entered into a definitive agreement to acquire generating assets representing 2,988 MW of capacity in the competitive Electric Reliability Council of Texas (ERCOT) market.
Luminant has agreed to purchase NextEra Energy‘s (NYSE: NEE) La Frontera portfolio, which consists of the Forney Energy Center and the Lamar Energy Center, both located in Northeast Texas.
“These plants are strategic investments that enhance our asset portfolio while building on our existing operations in ERCOT,” said Luminant Chief Executive Officer Mac McFarland.
Luminant adds these combined-cycle gas turbine power plants to an already diverse energy portfolio that includes coal, natural gas and nuclear power, as well as significant purchases of wind-generated electricity and a recently announced solar power purchase agreement.
The deal involves a $1.313 billion purchase price ($440 per installed kilowatt) plus approximately $239 million for cash and about $37 million for net working capital, subject to customary adjustments based on the amounts of cash and net working capital at closing. The transaction is expected to close in the spring of 2016, pending customary regulatory approvals.
Funding of the purchase price is expected to come from cash on hand as well as borrowings under available credit facilities. The U.S. Bankruptcy Court handling the Chapter 11 case of Luminant parent Energy Future Holdings and appropriate creditor groups have granted the necessary approvals for the acquisition. The court recently granted that approval based on the company’s argument that this was an unusually good deal, with details of the agreement redacted from the court’s public record.
- The Forney Energy Center is located in Forney, Texas. It has a capacity of 1,912 MW with a commercial operation date of 2003.
- The Lamar Energy Center is located in Paris, Texas. It has a capacity of 1,076 MW with a commercial operation date of 2000.
This buy will be from NextEra Energy Resources LLC, the competitive energy subsidiary of Florida-based NextEra Energy. A NextEra Energy Resources affiliate will continue to operate both of the facilities included in the sale for an initial period of up to one year.
“This transaction enables us to further optimize our power generation assets and is consistent with our strategy of reducing our merchant exposure while recycling capital into our growing long-term contracted asset portfolio,” said Armando Pimentel, president and CEO of NextEra Energy Resources.
Following the closing of the sale, NextEra Energy Resources said it will continue to own and operate a diverse mix of clean generating assets in 25 states, including Texas, and Canada, with a combined capacity of approximately 17,000 MW.
Citi is serving as financial advisor to NextEra Energy Resources, and Hogan Lovells is legal counsel.
NextEra Energy Resources is one of the largest wholesale generators of electric power in the U.S., with approximately 19,777 MW of generating capacity, which includes megawatts associated with non-controlling interests related to NextEra Energy Partners LP (NYSE: NEP).
Luminant has more than 13,700 megawatts of generation in Texas, including 2,300 MW fueled by nuclear power and 8,000 MW fueled by coal. The company is a large purchaser of wind-generated electricity. Energy Future Holdings is a Dallas-based energy holding company that has a portfolio of competitive and regulated energy subsidiaries in Texas.