NEWARK, N.J., March 15, 2004 — PSEG Resources, an indirect subsidiary of Public Service Enterprise Group (PSEG) and a direct subsidiary of PSEG Energy Holdings LLC has announced an agreement with Midwest Generation LLC, an indirect subsidiary of Edison Mission Energy (EME), to terminate its lease investment in the Collins generating facility in Illinois.
The lease termination is contingent on several conditions, including Midwest Generation’s successfully borrowing funds to finance the repayment of lease debt of $774 million and settle its termination liability with Resources as lease equity investor. As a result, no closing date has been set.
Eileen A. Moran, president of PSEG Resources, which makes energy-related investments, said that, under the proposed termination agreement, Resources would receive pre-tax proceeds of approximately $184 million of cash.
“These proceeds, which include deferred taxes and accrued earnings since the lease’s inception in 1999, would allow Resources to substantially recover its investment of $199 million, as of December 31, 2003,” she said. “The lease termination would also reduce Resources’ as well as PSEG’s overall risk exposure to EME, with which it has a lease investment involving Powerton and Joliet, two other Illinois generating facilities also operated by Midwest Generation.”
PSEG expects to incur a loss upon termination of the Collins lease of approximately 7 cents per share of its common stock.
PSEG Resources maintains a diverse portfolio comprised largely of assets related to energy infrastructure financing. Its portfolio is valued at about $3 billion.