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

PNM files ownership plan, coal supply deal with regulators

New Mexico's largest electric provider says it's on track to meeting a deadline for submittin...

Oklahoma attorney general challenges EPA's clean-air plan

A plan by the U.S. Environmental Protection Agency to reduce emissions from coal-fired power ...

Wave Energy Week will mix marine energy developers with traditional hydropower

Oregon Gov. Kate Brown, Democrat, has proclaimed “July 13-17, 2015 to be Oregon Wave Week in ...

Public Service Company of Oklahoma seeks rate increase

Public Service Company of Oklahoma is asking for a 13.6 percent rate increase it says is need...

GAO looks at reliability impacts of changing power generation mix

The Government Accountability Office (GAO) on June 29 released a study provided a month befor...

On the day after MATS decision, Bernstein sees only a limited reprieve for coal units

In light of the U.S. Supreme Court ruling against the EPA's Mercury and Air Toxics Standards ...

Pence says Indiana will not comply with coal plant regulations

Indiana will not comply with President Barack Obama's plan to battle climate change by requir...

Westermost Rough offshore wind park enters operations

The 210-MW offshore wind power plant, Westermost Rough, has entered operations. The project w...

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

NW Natural Announces Dividend and Schedules Conference Call to Review Results for the Three and Six Months Ended June 30, 2015

NW Natural Announces Dividend and Schedules Conference Call to Review Results for the T...

Vantage Drilling Responds to News Reports Regarding Petrobras

Vantage Drilling Responds to News Reports Regarding Petrobras

National Grid Drives Innovation Through REV Demonstration Projects

National Grid Drives Innovation Through REV Demonstration Projects

Cardinal Resources' $28.8 Million Cameroon Red Bird Contract Advances; Company Expects Financing Completed, Implementation, in Q3-15

Cardinal Resources' $28.8 Million Cameroon Red Bird Contract Advances; Company Expects ...

Letter From CGE Energy (McKenzie Bay Intl.) President Bryan Zaplitny

Letter From CGE Energy (McKenzie Bay Intl.) President Bryan Zaplitny

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 >>