) wrapped up the closure of its six power plants to an associate of
LS Power for $1.57 billion including adjustments. The non-core
asset sale includes 3,498 megawatt (MW) of combined-cycle
generation capacity encompassing five states in the Southeastern
U.S. The market reacted positively to the news with Calpine's stock
price moving up 0.17% to close at $22.91 on Thursday.
The company expects to clock a net book gain of $750 million in
the third quarter of 2014. In addition, taxable gains are
anticipated to be wholly offset by federal and state net operating
losses resulting in net cash proceeds of roughly $1.53 billion.
Calpine intends to plough back the gains to tap the markets
presenting high-returns and also to unlock better value to its
Calpine's assets sold to LS Power include the Oneta Energy
Center in Coweta Okla., Carville facility in Gabriel, La., Hog
Bayou in Mobile, Ala., Decatur facility in Decatur Ala., Santa Rosa
in Pace, Fla. and Columbia in Calhoun County, S.C.
Despite the sale, Calpine will retain some assets in the
Southeastern zone with 1.7 gigawatts of capacity covering
natural-gas fired plants in the Arkansas, Alabama and Florida
With the asset streamlining, Calpine plans to concentrate on the
wholesale and competitive power space. The company will integrate
its remaining assets in Southeastern province to its operations at
North. Together, the assets will form Calpine's East
Calpine is realigning its assets in the East to expand its
natural gas fired generation capabilities which is a positive move
given the current pro-environment stance taken by the U.S.
government. Meanwhile, signs of steady economic recovery in the
company's West and Texas regions will bode well for Calpine's
Calpine has been reshaping its business structure to focus its
investments on its three nucleus operation centers-the West, East
and Texas. Along with the divestitures, Calpine has been
simultaneously engaged in asset acquisitions in its core markets.
The addition of Russell City and Los Esteros energy facilities in
California and purchase of Guadalupe gas plant in Texas will likely
act as growth catalysts.
Currently, Calpine holds a Zacks Rank #2 (Buy). Other
better-placed utility players include
Wisconsin Energy Corp.
NRG Energy Inc.
). All these stocks presently sport a Zacks Rank #1 (Strong
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