Constellation, EDF enter investment agreement

17 December 2008 — Constellation Energy and EDF Development Inc. (a unit of EDF) announced an agreement under which EDF will acquire a 49.99 percent interest in Constellation Energy Nuclear Group, LLC for $4.5 billion. At the same time, Constellation and MidAmerican Energy Holdings Co. ended their Sept. 19, 2008, merger agreement.

Constellation Energy Nuclear Group owns 3,869 MW of nuclear generating capacity, which consists of the Calvert Cliffs Nuclear Power Plant in Maryland, and Nine Mile Point Nuclear Station and R.E. Ginna Nuclear Power Plant in New York. EDF Development Inc.’s interest in Constellation Energy Nuclear Group will be structured as a joint venture between the companies, separate from the existing UniStar joint venture.

Under terms of the investment agreement, EDF Group will make a $1 billion purchase of Constellation stock. EDF Development Inc. and Constellation Energy also entered into a two-year “asset put option” that allows Constellation to sell to EDF up to $2 billion of non-nuclear generation assets. EDF Group also would provide a $600 million interim “backstop liquidity facility”.

MidAmerican had provided $1 billion in capital to assist Constellation in continuing their business operations during times of financial stress. Under the provisions of the termination agreement, MidAmerican will receive a $175 million termination fee. MEHC Investment, Inc., a wholly owned subsidiary of MidAmerican, will receive a $1 billion note at 14 percent interest, maturing Dec. 31, 2009; approximately 20 million shares of Constellation Energy common stock, representing nearly 10 percent of outstanding shares; and approximately $418 million in cash. Additionally, the $350 million liquidity resource will terminate.

In the U.S., EDF Group and Constellation Energy have an existing partnership through their UniStar joint venture to build, own and operate new nuclear generation.

The agreement reflects an amended offer from EDF Group, which follows the company’s initial proposal to Constellation Energy’s board on Dec. 2.

Stories of interest:

EDF raises bid for Constellation

MidAmerican buys Constellation

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