Berlin utility Bewag will, after all, form part of the “Neue Kraft” energy grouping being assembled to rival E.On and RWE, following the announcement today that co-owner, Mirant has agreed to sell its 44.8 per cent interest to Swedish energy group Vattenfall.
Bewag was to have joined with Vattenfall’s other German interests, Hamburg utility HEW, Veag and Laubag in forming the “New Force” until Mirant withdrew its co-operation in late September. Mirant has now agreed to sell its share in the vertically integrated utility to Vattenfall for $1.63bn.
Lars Josefsson, president and CEO of Vattenfall said, “I am extremely satisfied that we have reached an agreement with Mirant. Bewag can now be fully integrated in our activities. This is a decisive step forward in the formation of the new force in the German market, which will greatly benefit the customers of Germany”.
“This transaction provides a fair price for our share of Bewag,” said Marce Fuller, president and CEO, Mirant”.
In 1997, Mirant purchased an initial 26 per cent interest in Bewag. In 2001, the company increased its ownership to 44.8 per cent and, as of the end of the third quarter, had a book investment in Bewag of approximately $700m, plus approximately $600m of related debt.
Mirant expects to realize approximately $900m in after-tax proceeds from the sale following repayment of related debt obligations.
Added Fuller, “We are proud to have been a strategic investor in Bewag and to have supported its efforts to become one of the most efficient, most profitable power utilities in Germany. Mirant remains committed to furthering business interests in Germany and other European markets. We will continue to take steps toward building an integrated energy business in Europe much like our highly successful U.S. model, which combines ownership of power generation and natural gas assets with energy marketing and risk management expertise.”
The sale price is not subject to currency changes but is contingent only on approval by relevant anti-trust authorities.
Located in Germany’s capital city Berlin, Bewag owns 29 power and steam units generating 2995 MW of electricity and 5740 MW of thermal energy sold for heating. Electric power is transmitted to Bewag’s approximately 2.2m electric customers over 38 770 km of cable, most of which is underground. The total net sales for Bewag in fiscal year 2000/2001 were €1.986bn (approximately $1.76bn).