PERRYVILLE, La. – Cleco Corp. and Mirant announced that the companies have signed an agreement in which Cleco will buy Mirant’s 50 percent interest in the 725-megawatt power plant the companies are building in northeast Louisiana.
The natural gas-fired plant is owned by Perryville Energy Partners LLC, a 50/50 joint venture between subsidiaries of Cleco and Mirant. Under the agreement, Cleco will assume Mirant’s $19.5 million future equity commitment to the project and pay $48 million to retire Mirant’s project debt. Cleco intends to finance the transaction with a combination of new common stock and debt. Currently, the company is planning the issuance of 1 million shares of common stock.
The deal is expected to close early in the second quarter 2002.
“The sale of our interest in Perryville is consistent with the objectives stated in our new business plan, which include the sale of targeted assets in order to strengthen the corporation’s balance sheet and improve liquidity,” said Rick Pershing, executive vice president of Mirant’s North American operations. “We stated that we may sell assets totaling nearly $1.6 billion, and this sale, along with the sale of our Bewag interest earlier this year and the proposed sale of our State Line facility, would put us at approximately $1.3 billion toward that goal.”
Mirant will continue to control output of the plant under a 20-year power sales agreement. That agreement allows Mirant to own and market the plant’s output and supply the natural gas needed to fuel the plant through its marketing and risk management organization.
Mirant will transition oversight of the remaining construction to Cleco. The plant’s 568-megawatt, combined-cycle unit is scheduled to begin commercial operation in July 2002. The plant’s first phase, a 157-megawatt, simple-cycle unit, began commercial operation last summer. Cleco will continue operating and maintaining the plant, which is located about 12 miles north of Monroe, La.
“We feel this was an acquisition we couldn’t pass up. There are few opportunities in today’s market to acquire power plants with a long-term output contract already in place,” said David Eppler, Cleco’s president and chief executive officer. “Purchasing the other half of this state-of-the-art power plant solidifies our position as a power provider in Louisiana. Also, we expect it will add another $0.02 to $0.04 per share to corporate earnings, and it puts us that much closer to our goal of having a portfolio of 4,000 megawatts by 2005.”