FirstEnergy Corp. has dropped the sales price for five natural gas plants and a hydro electric facility in Pennsylvania and Virginia in an effort to close on a drawn-out deal with a New York-based private equity firm.
The Ohio-based power company had announced in January that it would sell four natural gas power plants — the Springdale Generating Facility in Allegheny County; the Gans Generating Facility in Greene County; the Chambersburg Generating Facility in Franklin County; and the Hunlock Green gas power plant in Luzerne County — along with its stake in the Bath County pumped storage facility in Virginia to LS Power Equity Partners III LP for $925 million in cash.
The move was part of FirstEnergy’s goal of transitioning into a completely regulated company and minimizing its exposure to competitive electric generation markets.
But negotiating the finer points of the sale proved a challenge.
By late May, FirstEnergy subsidiaries “exercised a provision in the purchase agreement that allows either party to terminate the purchase agreement without penalty after June 23, 2017,” the company disclosed in its second quarter report to analysts.
FirstEnergy said it was still trying to work out a deal, but the company’s competitive generation division had to record a write-down of $131 million for the second quarter “as a result of the status of these ongoing negotiations” and “reflecting the impact of prevailing market conditions.”
On Wednesday, the company announced that it has amended its original agreement with LS Power to lower the overall price to $825 million and throw in a bonus — its interest in another natural gas plant, the Buchanan Generating Facility in Oakwood, Va.
While FirstEnergy expects the Pennsylvania natural gas plants to be sold by the end of the year, with the Virginia assets being transferred early next year, there are still some debt financing arrangements for Bath that need to fall into place before the deal can close.
“The 20 employees at these plants will be offered employment with the new owner,” FirstEnergy said in a statement.
Anya Litvak: email@example.com or 412-263-1455.