26 September, 2002 – At least three companies are expected to submit bids to buy US nuclear power generator AmerGen Energy Co, which has been pit up for sale by joint owners British Energy and Exelon Corporation.
Entergy Corp., Constellation Energy and Florida Power & Light Co (FPL) have expressed strong interest and are expected to put in bids over the next few days, the sources said.
Preliminary talks have already been held between AmerGen and the potential buyers and the seller is expected to send out an ‘offer memorandum’ on the business to the three companies next week. British Energy and Excelon own 50 per cent each in AmerGen.
Expected bids could value the whole of AmerGen at over a $1.0bn, the sources said.
British Energy, currently struggling to stay afloat, is aiming to sign up a buyer by November and is expected to close the deal some time next year.
Another U.S. power company, Dominion Resources Inc, had initially shown interest to bid. It backed out from the race but has reserved the right to return to the table in the future. Dominion could not reached for comment.
Progress Energy, based in Raleigh, North Carolina; has also held preliminary talks with British Energy but it is not known whether it will put in a formal bid for the business. Progress could not be reached for comment.
The sale of AmerGen comes at a time when British Energy, the largest power producer in the UK, is in desperate talks with bankers, financial advisors and the British government to avoid liquidation.
Any sale by British Energy has to be recommended by Excelon and sources say that even Exelon, at a suitable price, could step into buy the 50 per cent stake that it does not own.
The British government and British Energy were working on Wednesday towards extending the life of an emergency state loan by at least two months and are expected to announce this on Thursday, sources familiar with those talks said.
The loan of 410 million pounds ($638 million) given to British Energy earlier this month matures on Friday. Without the loan British Energy would have headed towards bankruptcy.
The company stunned investors this month when it revealed a cash crunch and asked for money from the government weeks after telling shareholders it was solvent.
The crisis was sparked by falling power prices and high fixed costs that forced the firm to sell electricity below cost.
Investment bank Lazard and Salomon Smith Barney, the investment banking arm of Citigroup are advising British Energy. Lazard, which has recently built a strong advisory team in the utilities sector in North America, however, is the sole advisor on the AmerGen transaction.