Duke asset sales to reap nearly $1 billion
DALLAS, May 6, 2004 — Duke Energy said Tuesday it would sell power-generation assets in the Southeast in deal expected to generate $1 billion for the utility company.
The amount of the transaction with KGen Partners LLC is worth $475 million, but including around $500 million in tax benefits, the Charlotte, N.C.-based energy company expects proceeds to total about $1 billion.
Duke’s shares traded down by 7 cents to close at $20.88.
The company expects the deal to close in the third quarter. So far this year, Duke has either announced or closed asset sales that will provide the company with approximately $2.5 billion.
“In January, we announced our strategy for a smaller, more focused merchant energy business,” said Chairman and CEO Paul Anderson said. “Upon closing this transaction, we will have reduced our merchant generation fleet by a third and will no longer own merchant generation in the southeast United States.”
Anderson added that Duke is well ahead of its 2004 target for asset sales.
The deal reduces already reported first-quarter results by $36 million, or 3 cents a share.
The one-time charge results in net income of 33 cents a share, while ongoing earnings remain 32 cents a share.
Kgen is owned by MatlinPatterson Global Opportunities Partners II.