Ameren to Divest Merchant Generation Business; Focus on Rate-Regulated Operations

Thu Mar 14, 2013 7:25am EDT

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-- Divestiture Expected to Improve Predictability of Earnings and Cash Flows
ST. LOUIS,  March 14, 2013  /PRNewswire/ -- Ameren Corporation (Ameren)
(NYSE:AEE) today announced that it has entered into a definitive agreement to
divest its merchant generation business, Ameren Energy Resources Company (AER),
to an affiliate of Dynegy Inc. (NYSE:DYN). AER consists primarily of Ameren
Energy Generating Company (Genco), including Genco's 80 percent ownership
interest in Electric Energy, Inc.; AmerenEnergy Resources Generating Company
(AERG); and Ameren Energy Marketing Company.

"Divestiture of the merchant generation business will position Ameren as a
company focused exclusively on its rate-regulated electric, natural gas and
transmission operations, clarifying our strategic direction and value
proposition to investors," said  Thomas R. Voss, chairman, president and CEO of
Ameren Corporation. "We expect that this transaction will reduce business risk
and improve the predictability of our future earnings and cash flows, which is
expected to strengthen Ameren's credit profile and support Ameren's dividend."  

The divestiture will not impact the electric and natural gas utility service
provided by Ameren's rate-regulated businesses, Ameren Illinois and Ameren

Total value benefits associated with the divestiture are estimated to be
approximately  $900 million  for Ameren. This includes removal of the  $825
million  principal amount of Genco senior notes from Ameren's consolidated
balance sheet and an estimated  $180 million, at present value, of tax benefits
expected to be substantially realized in 2015. These benefits are partially
offset by transaction-related costs and liabilities retained by Ameren. These
liabilities include retention of certain employee retirement obligations. In
addition, Ameren will retain Genco's  Meredosia  and  Hutsonville  energy
centers, which are no longer in operation, and related obligations. Further,
Ameren will provide guarantees and collateral support, secured by AER assets and
a  $25 million  Dynegy Inc. guarantee, for up to 24 months for certain existing
contracts. Ameren will receive no cash proceeds as a result of this transaction.

Genco's existing senior notes will remain outstanding after the transaction
closes and will continue to be solely obligations of Genco.  

Prior to entering into the divestiture agreement, the existing Genco put option
agreement was amended and exercised. As a result, an affiliate of Ameren that is
not a member of the divested group will acquire the  Elgin,  Gibson City  and 
Grand Tower  gas-fired energy centers prior to completion of the divesture
transaction, subject to approval by the Federal Energy Regulatory Commission
(FERC). This Ameren affiliate will initially pay Genco the greater of  $133
million  or the appraised value of these assets.  Should these assets be sold
within two years of the divestiture, the after-tax proceeds realized in excess
of the initial amount paid will be due to Genco. Ameren plans to put the three
gas-fired energy centers up for sale as soon as reasonably practical.   

The agreement also provides that the buyer will honor collective bargaining
agreements for AER union employees and provide those AER management employees
who continue to work for the buyer with competitive pay and benefits.

As a result of the planned divestiture, AER is expected to be classified as held
for sale and reported as discontinued operations in Ameren's consolidated
financial statements beginning in the first quarter of 2013. Ameren also expects
to record an after-tax charge to earnings estimated to be in the range of  $300
million  to write down the carrying value of the divested business and expense
transaction-related costs.  

The transaction is subject to regulatory approvals, including from the FERC, and
other customary conditions and is expected to be completed in the fourth quarter
of 2013.

J.P. Morgan served as lead financial advisor and provided a fairness opinion to
Ameren. Greenhill also provided a fairness opinion. Wachtell, Lipton, Rosen &
Katz served as legal counsel.  

Analyst Conference Call  

Ameren will conduct a conference call for financial analysts and investors at 
10 a.m. Central Time  on  Thursday, March 14, to discuss this transaction.
Investors, the news media and the public may listen to a live Internet broadcast
of the call at by clicking on "Merchant Generation Divestiture,"
followed by the appropriate audio link. An accompanying slide presentation will
be available on Ameren's website. This presentation will be posted in the
"Investors" section of the website under "Webcasts & Presentations." In
addition, a telephone playback of the conference call will be available
beginning at approximately  1 p.m. Central Time  from  March 14 through March
21, by dialing U.S. 877.660.6853 or international 201.612.7415, and entering ID
number 410930.

About Ameren

St. Louis-based Ameren Corporation serves 2.4 million electric customers and
more than 900,000 natural gas customers in a 64,000-square-mile area through our
Ameren Missouri and Ameren Illinois rate-regulated utility subsidiaries. Ameren
Illinois provides electric and natural gas delivery service while Ameren
Missouri provides vertically integrated electric service, with generating
capacity of 10,300 megawatts, and natural gas delivery service. Ameren
Transmission develops regional electric transmission projects. In  March 2013,
we entered into a definitive agreement to divest our  Illinois-based merchant
generation business. Our mission is to meet our customers' energy needs in a
safe, reliable, efficient and environmentally-responsible manner while enhancing
shareholder value. For more information, visit       

Forward-looking Statements

Statements in this release not based on historical facts are considered
"forward-looking" and, accordingly, involve risks and uncertainties that could
cause actual results to differ materially from those discussed. Although such
forward-looking statements have been made in good faith and are based on
reasonable assumptions, there is no assurance that the expected results will be
achieved. These statements include (without limitation) statements as to future
expectations, beliefs, plans, strategies, objectives, events, conditions, and
financial performance. In connection with the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we are providing this
cautionary statement to identify important factors that could cause actual
results to differ materially from those anticipated. The following factors, in
addition to those discussed under Risk Factors in Ameren's Form 10-K for the
year ended  December 31, 2012, and elsewhere in this release and in our other
filings with the Securities and Exchange Commission, could cause actual results
to differ materially from management expectations suggested in such
forward-looking statements:

* Ameren's eventual exit from the Merchant Generation business could result in
impairments of long-lived assets, disposal-related losses, contingencies,
reduction of existing deferred tax assets, or could have other adverse impacts
on the financial condition, results of operations and liquidity of Ameren;
* regulatory approvals, including from the FERC, and the satisfaction or waiver
of the other customary conditions to the divestiture of the Merchant Generation
* changes in laws and other governmental actions, including monetary, fiscal,
and tax policies including such changes that result in our being unable to claim
all or a portion of the cash tax benefits that are expected to result from the
divestiture of AER;
* changes in laws or regulations that adversely affect the ability of electric
distribution companies and other purchasers of wholesale electricity to pay
their suppliers, including Ameren Energy Marketing Company;
* increasing capital expenditure and operating expense requirements and our
ability to recover these costs;
* the cost and availability of fuel such as coal, natural gas, and enriched
uranium used to produce electricity; the cost and availability of purchased
power and natural gas for distribution; and the level and volatility of future
market prices for such commodities, including the ability to recover the costs
for such commodities;
* the effectiveness of our risk management strategies and the use of financial
and derivative instruments;  
* the level and volatility of future prices for power in the Midwest, which may
have a significant effect on the financial condition of Ameren's Merchant
Generation segment;  
* disruptions of the capital markets, deterioration in credit metrics of the
Ameren companies, or other events that make the Ameren companies' access to
necessary capital, including short-term credit and liquidity, impossible, more
difficult, or more costly;
* our assessment of our liquidity, including liquidity concerns for Ameren's
Merchant Generation business, and specifically for Genco, which has limited
access to third-party financing sources;
* the impact of the adoption of new accounting guidance and the application of
appropriate technical accounting rules and guidance;
* the impact of system outages;
* generation, transmission and distribution asset construction, installation,
performance, and cost recovery;
* impairments of long-lived assets, intangible assets, or goodwill;
* the effects of strategic initiatives, including mergers, acquisitions and
divestitures, including the sale of the Merchant Generation business, and any
related tax implications;
* the impact of current environmental regulations on power generating companies
and new, more stringent or changing requirements, including those related to
greenhouse gases, other emissions, cooling water intake structures, coal
combustion residuals, and energy efficiency, that are enacted over time and that
could limit or terminate the operation of certain of our generating units,
increase our costs, result in an impairment of our assets, reduce our customers'
demand for electricity or natural gas, or otherwise have a negative financial
* labor disputes, workforce reductions, future wage and employee benefits costs,
including changes in discount rates and returns on benefit plan assets;
* the inability of our counterparties and affiliates to meet their obligations
with respect to contracts, credit agreements and financial instruments;
* legal and administrative proceedings; and
* acts of sabotage, war, terrorism, cybersecurity attacks or intentionally
disruptive acts.

Given these uncertainties, undue reliance should not be placed on these
forward-looking statements. Except to the extent required by the federal
securities laws, we undertake no obligation to update or revise publicly any
forward-looking statements to reflect new information or future events.


SOURCE  Ameren Corporation

Media, Brian Bretsch, +1-314-554-4135,; Analysts, Doug
Fischer, +1-314-554-4859,, or Matt Thayer, +1-314-554-3151,; or Investors, Investor Services, 1-800-255-2237,

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