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.