GPU announce $1.7 Bn power plant deal

Sithe Energies is to purchase 23 power plants with a generating capacity of 4,117 megawatts, 18 generation development properties, three support service organisations, and the Johnstown, PA office building for $1.68 billion.

In a separate agreement, FirstEnergy Corporation will purchase GPU’s 87 megawatt interest (20 percent) in the Seneca pumped-storage hyrdoelectric generating station for $43 million. FirstEnergy already owns 80 percent of the Seneca plant. The sale transactions, which will require a number of state and federal regulatory and other approvals, are expected to close by mid-year 1999.

Monday’s deal follows agreements to sell the Homer City Generating Station in August and the Three Mile Island – Unit 1 Nuclear facility in October 15. “GPU has taken the definitive step in our strategy to exit the generation business and focus on the expansion of our infrastructure business,” said Fred D. Hafer, GPU chairman, president and chief executive officer.

Sithe Energies is a joint-ownership of the French services company Vivendi (60%), the Japanese trading company Marubeni Corporation (29%), and management ownership (11%). The company operates 29 power plants in the US and Canada. The New York based company also has a global portfolio of projects under operation, construction or active development worth $6 billion.

First Energy is a diversified energy services holding company headquartered in Akron, Ohio. The company is the 12th largest electric system in the nation. Its four operating companies provide electric energy and other energy-related products and services to 2.2 million customers in central and northern Ohio and western Pennsylvania.

The combined sale of GPU’s non-nuclear generating assets is $2.62 billion resulting in 2.5 times book value, which equals approximately $510 per kilowatt.