AES to sell 2700 MW in CCGT power plant assets for proceeds totaling $463MM

Source: AES Corporation 

AES Ironwood Inc., a 705 MW CCGT plant located in Pennsylvania The AES Corporation (NYSE: AES) announced today that the Company has signed agreements to sell AES Red Oak LLC (Red Oak), an 832 megawatt (MW) combined cycle gas turbine (CCGT) power plant located in New Jersey, to Energy Capital Partners and AES Ironwood Inc. (Ironwood), a 705 MW CCGT plant located in Pennsylvania, to PPL Generation LLC, a wholly owned subsidiary of PPL Corporation. AES further announced that it has completed the previously announced sale of AES Energia Cartagena S.R.L (Cartagena), a 1,199 MW CCGT plant in Spain, to GDF Suez International Holdings. Aggregate proceeds from the sale of AES’ 100 percent interest in Red Oak and Ironwood and 80 percent of its interest in Cartagena are approximately $463 million.

“These transactions demonstrate we are executing on our strategy of aligning our portfolio to create shareholder value,” said Andrés Gluski, AES President and Chief Executive Officer.

Use of proceeds will be evaluated in accordance with AES’ capital allocation policy to maximize total shareholder returns by paying down debt, investing in new businesses or repurchasing shares. The three businesses together contributed approximately $26 million of net income to AES in 2011 after adjusting for ownership interests, unrealized foreign currency losses and mark-to-market derivatives losses. With total proceeds of $463 million, the implied aggregate P/E multiple for these transactions is 17.5 times estimated 2011 earnings.

The Red Oak and Ironwood transactions are subject to approval of the Federal Energy Regulatory Commission, antitrust review under Hart-Scott-Rodino Act and other commercial approvals.

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