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Strategies & Market Trends : IPPs and Merchant Energy Co.s
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To: NDBFREE who wrote (3026)1/5/2004 7:57:16 AM
From: NDBFREE  Read Replies (1) of 3358
 
From 1 of my online newsletters (CNP/TGN/RRI)

CenterPoint Seen Considering Nixing Genco Sale
Jan. 5 (Power Finance & Risk)

CenterPoint Energy is considering retaining ownership of Texas Genco (TGN), rather than selling the 14.5 GW power plant portfolio, says a banker who has spoken with management. The reversal in strategy follows Reliant Resources' announcement last month that it is unlikely to take up an option, that becomes exercisable this week, to acquire the $2.5 billion 11 plant portfolio. Leticia Lowe, spokeswoman at CenterPoint, did not return calls.
Houston-based CenterPoint is considering various ways to monetize TGN that would not involve a direct sale of its 81% stake, says the banker. Management might go to the bond market to securitize TGN's revenues or spin out new stock to CenterPoint's shareholders, "but selling [plants] in Texas right now isn't very appealing," argues the banker.

CenterPoint announced that TGN was not a core business almost two years ago when it de-merged its Reliant Resources affiliate, to become a dedicated wires infrastructure company. As part of the de-merger agreement, Reliant was awarded the option to acquire CentrePoint's stake in TGN during a Jan. 10-24 window at a price equivalent to its rolling stock-market valuation.

TGN's stock soared to $30 last week from $8 early last year in anticipation that Reliant would exercise its option. Reliant's decision to back out of the purchase has forced CenterPoint to look at other strategies for the business.
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