Constellation Energy to buy two 550 MW natural gas power plants in Texas

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Baltimore, April 16, 2010 – Constellation Energy signed an agreement with Houston-based Navasota Holdings to purchase two natural gas combined-cycle generation facilities in Texas for $365 million, the equivalent of $332 per kilowatt.

The purchase price is subject to closing adjustments. The transaction includes the Colorado Bend Energy Center, a 550-MW facility near Wharton, Texas, and Quail Run Energy Center, a 550-MW facility near Odessa, Texas.

The proposed purchase would add 1,100 MW of capacity to Constellation Energy‘s generation portfolio and provides a physical presence of material scale in the Electric Reliability Council of Texas, where the company’s large wholesale and retail supply businesses sell a significant amount of power.

The acquisition is in line with the company’s previously announced strategy of deploying up to $1 billion over the next 12-24 months to acquire assets in regions where the company’s load obligations exceed its generation capacity.

Colorado Bend and Quail Run each have 275-MW expansion projects in advanced development, creating the long-term potential to further balance Constellation Energy’s generation capacity and customer supply obligations in ERCOT.

“These modern, well-managed natural gas assets represent an important addition to our generation portfolio and are an ideal fit to support our expanding commercial businesses in Texas,” said Mayo A. Shattuck III, chairman, president and chief executive officer of Constellation Energy. “Matching our generation and load-serving businesses in competitive markets should drive greater efficiencies in capital requirements, realized earnings and cash flow.”

The transaction is subject to certain state and federal regulatory approvals, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Act and standard terms and conditions. It is expected to close in the second quarter of 2010.

Navasota Energy Partners LP is a Houston-based energy development and asset management company that builds and manages power plants throughout the state of Texas.

Citi served as transaction adviser for Constellation Energy; Kirkland and Ellis LLP served as Constellation’s legal counsel. J.P. Morgan acted as Navasota Holdings’ financial adviser; Milbank, Tweed, Hadley & McCloy LLP acted as legal counsel to certain holders of Navasota Holdings.


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