29 July 29, 2005 – Calpine Corporation has completed the sale of its 1200 MW Saltend Energy Centre in Hull, England to an International Power/Mitsui & Co. partnership for a total purchase price of £490m ($848m), plus adjustments for working capital of $14.5m.
The transaction, which has generated total gross proceeds to Calpine of $862.5m (subject to post-closing adjustment), is part of the company’s strategic programme to reduce debt and optimize its power plant portfolio.
Calpine acquired the plant in August 2001 for the sterling equivalent of approximately $810m. With the completion of this transaction, Calpine no longer owns any interest in Saltend.
“The sale of Saltend has allowed Calpine to capture significant value for our investment,” said Calpine Chief Financial Officer Bob Kelly. “The proceeds from this sale will allow Calpine to reduce debt and focus our efforts on the North American power market.”
International Power said that the acquisition of Saltend was expected to be earnings enhancing in the first full year of ownership and immediately cash generative.
The total consideration includes the valuation of the plant and the associated gas and power contracts. A mix of debt and equity in a 55:45 ratio will fund the acquisition.