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Duke Energy reached an agreement to sell its holdings in Brazil to China Three Gorges Corp. for about $1.2 billion in cash and the assumption of debt.
The after-tax proceeds from the transaction are expected to be used to reduce Duke Energy holding company debt.
“This is another important step forward in driving our strategy to focus on our core domestic regulated business, and it builds on our recent acquisition of Piedmont Natural Gas,” said Lynn Good, president, CEO and chairman of Duke Energy. “We will work with the buyer to obtain the approvals necessary to close the transaction while continuing to safely operate the Latin American plants.
“We are also moving through the process of negotiating a sale of our remaining assets in Central and South America with the expectation of an additional announcement to follow,” Good added.
The company began the process of exiting its International Energy business segment in February 2016. Duke Energy International owns 4,400 MW of power generation facilities and engages in sales and marketing of electric power, natural gas and natural gas liquids in Central and South America.
CTG is a clean energy group focused on large-scale hydropower development and operation. CTG is also engaged in renewable energy businesses including wind and solar power.
The completion of the transaction is conditioned on approvals in Brazil from the National Agency of Electrical Energy (AgÃªncia Nacional de Energia ElÃ©trica) and the Brazilian Antitrust Agency (Conselho Administrativo de Defesa Economica) and the required approvals by Chinese authorities and other conditions precedent. Closing is expected to occur in two to four months.
Duke Energy Brazil owns 2,090 MW of power generation facilities. It has eight hydroelectric plants with 2,057 MW of capacity located on the border between the states of Sao Paulo and Parana and owns two small hydroelectric plants, each with a capacity of 16.5 MW, located on the Sapucai Mirim River in northern Sao Paulo State.
Duke Energy’s financial advisors are Credit Suisse and J.P. Morgan. Skadden, Arps, Slate, Meagher & Flom LLP is the company’s legal advisor.