Baltimore, August 9, 2010 — Constellation Energy announced it has signed an asset purchase agreement with Boston Generating to acquire its 2,950-MW fleet, the third largest power generating portfolio in the New England region, for about $1.1 billion, or roughly $372/kW.
The proposed transaction will be carried out through a court-approved bankruptcy proceeding to be initiated by Boston Generating. If approved, Constellation Energy’s bid would then be considered the price to be beat in an asset auction to be held later this year.
If Constellation Energy is ultimately the successful acquirer, under terms of the agreement it would acquire Boston Generating’s five power plants located in the Boston area: four natural gas fired plants, including Mystic 8 and 9 (1,580 MW), Fore River (787 MW), Mystic 7 (574 MW); and a fuel oil plant, Mystic Jet (9 MW).
Constellation Energy has previously stated its interest in acquiring physical generation assets in the New England Power Pool, where the company operates large retail and wholesale competitive supply businesses.
Constellation Energy currently serves about 13.3Twh of customer load in the NEPOOL market where Boston Generating is located. The company currently has no generation assets in the region.
“This agreement is consistent with Constellation Energy’s previously stated intention to purchase physical generation assets in regions where we have significant load obligations,” said Mayo A. Shattuck, III, chairman, president and chief executive officer of Constellation Energy. “These assets would expand our physical generation fleet with a portion of the total output further improving our net load to generation ratio to approximately 55 percent.”
Based on the current bid price, Constellation Energy would expect this transaction to be accretive to earnings beginning in 2011. Constellation Energy plans to finance this transaction through a mix of available cash on hand and debt.
Constellation Energy’s financial advisors were Credit Suisse and UBS Investment Bank and its legal advisor was Winston & Strawn LLP. Boston Generating’s financial advisors were J.P. Morgan and Perella Weinberg Partners and its legal advisor was Latham & Watkins LLP.
Constellation Energy is a leading supplier of energy products and services to wholesale and retail electric and natural gas customers. It owns a diversified fleet of generating units located in the U.S. and Canada, totaling approximately 9,000 MW of generating capacity, and is among the leaders pursuing the development of new nuclear plants in the U.S.
The company delivers electricity and natural gas through the Baltimore Gas and Electric Co., its regulated utility in Central Maryland.