) recently announced that it will sell six Southeastern power
plants in the U.S. to LS Power for $1.57 billion in cash. This
transaction will help the company to focus more on its core
competitive wholesale power markets, particularly in Western
U.S., Texas and the Mid-Atlantic.
This transaction is a part of the company's strategy to monetize
its non-core assets and utilize the proceeds for further
development of core business operations. Moreover, this
announcement earned a positive reaction from the stock market.
The stock price increased 4.6% on Apr 21, 2014.
These combined-cycle power plants together generate approximately
3.5 Gigawatt of electricity in Oklahoma, Louisiana, Alabama,
Florida and South Carolina. The transaction is expected to close
in the second quarter of 2014 subject to necessary regulatory
The company expects to generate $1.53 billion of net cash from
selling these assets. The company expects to utilize existing
federal and state net operating losses to almost entirely offset
the projected taxable gains from the sale. Apart from that the
company plans to pay down debt, invest in acquisition and
repurchase shares of common stock from the market with the
Calpine Corp. is an independent power generating company which
has more than 29,000 MW of generation capacity with a fleet of 94
power plants in operation or under construction in the U.S.
This Zacks Rank #2 (Buy) stock surpassed the Zacks Consensus
Estimate by 114.29% in the fourth quarter of 2013. The impressive
performance was driven by favorable portfolio changes and higher
regulatory capacity payments, in addition to new contracts. The
Zacks Consensus Estimate for 2014 is pegged at 73 cents per
share, reflecting year-over-year growth of 90.8%.
However, better-placed stocks in the space include Zacks Ranked
NRG Energy, Inc.
CPFL Energia S.A.
CPFL ENERGI-ADR (CPL): Free Stock Analysis
CALPINE CORP (CPN): Free Stock Analysis
ENTERGY CORP (ETR): Free Stock Analysis
NRG ENERGY INC (NRG): Free Stock Analysis
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