U.S. Energy and Cinergy acquire Zapco in $98 million deal

NEW YORK, CINCINNATI and AVON, Conn., Nov 28, 2000 (PRNewswire) — U.S. Energy Systems, Inc., an independent power producer, and its joint venture partner, Cinergy Solutions, Inc., an affiliate of Cincinnati-based Cinergy Corp., a diversified energy company, today announced a $98 million merger agreement to acquire Zahren Alternative Power Corporation (ZAPCO), a Connecticut-based developer and operator of renewable energy projects around the country.

The transaction, valued at approximately $98 million, includes $10 million in U.S. Energy Systems common stock, valued at $6 a share, and $3 million in convertible preferred stock; $12.8 million in cash; and approximately $72 million in assumed subsidiary debt. The merger, which is subject to, among other things, the approval of the shareholders of ZAPCO and U.S. Energy Systems, is expected to close in early 2001.

ZAPCO currently owns and operates 24 landfill gas-to-energy (LFG) projects and one natural gas cogeneration plant. Presently ZAPCO has more than 40 megawatts of electrical production capacity primarily under long-term contracts and additional direct sales of LFG.

"Competitive power markets, rising fuel prices and environmental commitments are generating significant interest in renewable energy sources," said Steve Harkness, President and Chief Operating Officer of Cinergy Solutions. "Customer demand for green power is increasing, and this acquisition expands our renewable energy assets and generates additional growth opportunities."

"ZAPCO has created the standard for developing and producing renewable energy in America today," said Goran Mornhed, President and COO of U.S. Energy Systems. "ZAPCO's mission fits well with our growth strategy and focus on providing clean, efficient energy for our customers everywhere."

"We are excited to join a growth team and an organization with a compatible mission of creating value by providing green power and renewable energy to our customers, thus improving the environment and reducing the negative effects of global warming and pollution," said Bernard Zahren, Chairman and CEO of ZAPCO. "Working with our partners at Cinergy Solutions, I see a tremendous opportunity to grow U.S. Energy Systems into one of the leading producers of clean energy."

ZAPCO will become a subsidiary of U.S. Energy Systems and Cinergy Solutions. According to the agreement, Bernard Zahren, Chairman and CEO of ZAPCO, will become CEO of U.S. Energy Systems, joining the management team of Goran Mornhed, President and COO, and Lawrence Schneider, the previous CEO, who will remain as Chairman.

Zahren will also become a director of U.S. Energy Systems as will Mark Strauch, Executive Vice President and Treasurer of AJG Financial Services, Inc., a business unit of Arthur J. Gallagher & Co., an international insurance brokerage and risk management services firm where Strauch also serves as Treasurer. AJG Financial Services, Inc. and the Environmental Opportunities Fund, LP are major shareholders of ZAPCO and will become shareholders of U.S. Energy Systems.

Cinergy Solutions, which last month invested $3.5 million in exchange for a stake in U.S. Energy Systems, will acquire approximately a 46 percent interest in the ZAPCO subsidiary with a two-year option to convert its ownership into U.S. Energy Systems stock. U.S. Energy Systems will have an option during the same period to acquire Cinergy Solutions' ownership interest.

As a renewable energy developer and operator, ZAPCO will benefit from emission reduction allowance programs. As the market for greenhouse gas reduction allowances develops, projected reductions from the collection and combustion of methane at ZAPCO's existing projects will be equivalent to the removal of approximately 50 million tons of carbon dioxide from the environment.

ZAPCO recently signed an agreement for the world's largest-to-date cross- border trade of emission reduction credits to a major Canadian utility. The credits were generated through ZAPCO's collection and combustion of methane from its LFG projects. The emission reductions from this trade are equivalent to removing approximately 500,000 automobiles from the road for one full year.

About U.S. Energy Systems, Inc.
U.S. Energy Systems, Inc. (Nasdaq: USEY) is an independent power producer that generates clean, efficient energy for the growing energy markets. The company develops, owns, and operates cogeneration power plants and renewable energy plants in the U.S. and offers a variety of environmental services. U.S. Energy Systems' competitive edge is maximizing the value of customized scope and services for its customers.

About Cinergy Corp.
Cinergy Corp. (NYSE: CIN) is one of the nation's leading diversified energy companies with a total enterprise value of $8.5 billion and assets of $10 billion. Cinergy owns or operates nearly 20,000 megawatts of electrical and combined heat plant generation that is either operational or under development domestically and internationally. It also has 55,000 miles of electric and gas transmission lines in the U.S. and abroad and approximately 9,000 employees in nine countries. Cinergy's Midwestern power grid gives the company access to 37% of total U.S. energy consumption.

Cinergy Solutions, Inc., an affiliate of Cinergy Corp., focuses primarily on cogeneration and energy outsourcing for large industrial customers, such as Kodak, General Motors and Millennium Chemicals (www.cinergy-solutions.com).

About ZAPCO
Founded in 1994, ZAPCO is one of the largest developers and operators of landfill gas collection systems and alternative energy projects in the United States. The company currently operates 25 projects and has additional LFG projects under development.

ZAPCO has been recognized for its efforts to reduce air emissions by the Environmental Protection Agency (EPA), the Department of Energy, the Solid Waste Association of North America and the Landfill Methane Outreach Program (a division of the EPA).

Sponsored by FLSmidth

Related Articles

Fuel Tech receives air pollution control contracts worth $3.6Mn

Fuel Tech Inc. has received multiple air pollution control (APC) contracts, worth approximately $3.6 million, from customers in China, Europe and the U.S.

NRC: DOE’s Yucca Mountain R&D meet NRC requirements

The staff of the U.S. Nuclear Regulatory Commission (NRC) published Volume 4 of its safety evaluation report on a proposed underground used nuclear fuel repository in Nevada.

Follow Power Engineering on Twitter

Latest News

Shutterstock coal production trucks

Weekly Coal Production

The Weekly Coal Production shows how much coal is being produced across the U.S.

Federal Reserve Bank of Dallas Weekly Economic Indicators financial business

The Federal Reserve Bank of Dallas' Economic Indicators

The Federal Reserve Bank of Dallas offers a glimpse into how the markets are doing domestical...

Kvaerner awarded contract for gas-fired power plant in Delaware

Kvaerner North American Construction Inc. and its joint venture partner, Parsons Brinckerhoff...

Canadian Solar purchases two solar projects

Canadian Solar Inc. has acquired a majority interest in two utility-scale solar power project...

Operators Restart Unit 2 at PPL Susquehanna

Unit 2 at the PPL Susquehanna nuclear power plant near Berwick, Pa. resumed generating electr...

Settlement agreement limits cost recovery at Edwardsport

The Indiana Utility Regulatory Commission (IURC) on Dec. 27 modified and approved a settlemen...

Toshiba in talks to sell portion of Westinghouse nuclear unit

Toshiba Corp is in talks  to sell up to 16% of its stake in the Westinghouse Electric Co...

Utah nixes nuclear waste storage facility

Plans to park radioactive waste at a storage facility in Utah have been officially called off.

Power Engineering Current Issue

03/01/2014
Volume 118, Issue 3
1403PE-cover

Products Showcase

Dynamic Fluoride Ion cleaning DFIC of industrial natural gas turbines Hi-Tech Furnace Systems

Dynamic Fluoride Ion Cleaning of IGT Parts

The Dynamic Fluoride Ion Cleaning (DFIC) Process from Hi-Tech Furnace Systems is able to clean deep, narrow cracks of oxides by cycling between negative, atmospheric, and positive pressure.

Archived Articles

2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013

Buyers Guide Categories

Buyers Guide Product Listings

Sargent & Lundy Construction Management Services

Providing complete construction management and ...

Mechanical Services

Expert mechanical services range from boiler ma...

Power Industry Wire News

Rockdale Resources Enhances Operations, Implements Cost Reductions and Changes Board Composition

Rockdale Resources Enhances Operations, Implements Cost Reductions and Changes Board Co...

Cardinal Energy Group, Inc.: Bradford Lease Drilling Report

Cardinal Energy Group, Inc.: Bradford Lease Drilling Report

MDU Places Dakota Natural Gas Pipeline on Hold, an Industrial Info News Alert

MDU Places Dakota Natural Gas Pipeline on Hold, an Industrial Info News Alert

Top Industrial Market News Stories for the Third Week of December 2014, an Industrial Info News Alert

Top Industrial Market News Stories for the Third Week of December 2014, an Industrial I...

American Leisure Holdings, Inc. Reports on Wholly Owned Subsidiary Financials

American Leisure Holdings, Inc. Reports on Wholly Owned Subsidiary Financials

Power Engineering

Article Archives for Power Engineering Magazine

Continuing Education

Professional Development Hours

To access a course listing associated to a specific topic listed below, click on the topic of choice from the list below.

Latest Energy Jobs

View more Job Listings >>