Exelon Corporation
(
EXC
), one of the nation's largest electric utilities, fulfills its
Constellation-merger conditions by deciding to sale three of its
Maryland based coal fired power plants to Raven Power Holdings LLC,
a unit of Riverstone Holdings LLC for $400 million. This
transaction is subject to the approvals of Federal Energy
Regulatory Commission ("FERC") and U.S. Department of Justice
("DOJ"), and is expected to be completed by fourth-quarter 2012.
During merger filing with FERC, both the companies assured that
this merger will not root competitive concerns. Exelon plans to
sell the concerned operations within 180 days after the closing of
the transaction to keep its earlier commitments.
The assets earmarked for sale are Brandon Shores, Pasadena; C.P.
Crane, Middle River; and H.A. Wagner, Pasadena. Exelon will
continue to operate these coal fired unit till the divesture is
accomplished.
This transaction is expected to generate cash-tax benefits of $205
million. The major part of the net proceeds will supposedly be
realized in 2012 and 2013. On account of variation between sale
price and carrying value of the plants, Exelon will post a pre-tax
loss of roughly $275 million in the third quarter of 2012. The gain
from the sale is expected to be optimally used by Exelon for
enhancement of its core operations.
In second-quarter 2012, Exelon reported operating earnings of 61
cents per share, missing the year-ago figure of $1.05 per share and
the Zacks Consensus Estimate of 63 cents per share.
During second-quarter 2012 earnings press release, Exelon
reaffirmed its full-year 2012 earnings guidance in the range of
$2.55 - $2.85 per share and expected operating earnings in the band
of 65 cents - 75 cents for third-quarter 2012.
We view Exelon Corporation as a well positioned organization with
accelerating investment in power plants and transmission, and
ongoing cost containment efforts. In addition, the company's merger
with Constellation will boost its operational growth in the coming
years.
Our major concerns regarding the company revolve around the effects
of volatile weather patterns, rising long-term interest rates and
higher operating costs.
Exelon Corporation currently retains a Zacks #3 Rank, which
translates into a short-term Hold rating.
Chicago, Illinois-based Exelon Corporation, a utility services
holding company, engages in the generation, transmission,
distribution and sale of electricity to residential, commercial,
industrial and wholesale customers. The company competes with
Ameren Corporation
(
AEE
).
AMEREN CORP (AEE): Free Stock Analysis Report
EXELON CORP (EXC): Free Stock Analysis Report
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