Canadian real estate developer Brascan Corp. Friday said it will buy Great Northern Paper Inc.’s hydroelectric generating and transmission system in northern Maine for $156.5 million.
Brascan said the acquisition will increase to 1,100 Mw the amount of generating capacity owned by its Great Lakes Power Inc. unit, including 28 power plants, primarily hydroelectric facilities in Ontario, Quebec, British Columbia, and Maine.
As well, the Toronto company said the hydro units will enhance its ability to market power in the increasingly integrated North American energy markets and expand interconnections with the New England Power Pool (NEPOOL’) and Quebec.
Brascan Chairman Robert Harding said the acquisition, operated in conjunction with the company’s existing interconnections between Quebec and Ontario and a planned interconnection between Ontario and Michigan, will provide an outlet for low-cost Canadian power in the US market.
The acquisition is expected to contribute to Brascan’s earnings beginning in January 2002. Incremental net operating cash flow after interest on proposed project debt is expected to exceed $14 million/year, the company said.
Brascan and Great Northern will also enter into long-term supply and power sales agreements that will provide Great Northern with the ability to reduce the power costs of its pulp and paper operations, the companies said.
The companies agreed to jointly study the development of a new transmission line connecting Quebec with NEPOOL, using Great Northern’s rights of way in northern Maine which extend to the Quebec border. Brascan said it will also acquire the rights of way required to increase the interconnection capacity from its current limit of 20 Mw, which Brascan plans to expand to over 130 Mw.
The acquisition includes the following power generating and transmission assets, and power marketing opportunities:
— Six hydroelectric generating stations located on the Penobscot River with a combined generating capacity of 130 Mw.
— Eleven water storage dams that provide 300,000 Mw-hr of storage capacity, contributing to maximizing on peak revenues from the hydroelectric system’s annual average electricity production of 750,000 Mw-hr.
— Opportunities through capital investment to enhance the system’s output and improve the reliability and efficiency of its generating units.
— Marketing agreements for up to 15 years with Great Northern for the supply of energy and the sale of surplus power production from the 280 Mw of combined generating capacity, consisting of the six acquired hydroelectric generating stations (130 Mw) and Great Northern’s thermal generating plant (150 Mw).
Brascan also holds a 48% interest in Brookfield Properties Corp., which owns One Liberty Plaza and three towers of the World Financial Center near the World Trade Center in New York City. Last month Brascan said buildings near the collapsed World Trade Center owned by Brookfield suffered no structural damage.