(Corrects headline and paragraph 1 to say Riverstone is not
buying PPL'S energy unit. The two companies are combining their
merchant power generation businesses. Removes reference to
Reverse Morris Trust)
June 10 PPL Corp and Riverstone Holdings
LLC said on Monday they would combine their merchant power
generation businesses into a new stand-alone, publicly traded
independent power producer.
The new company, which will own and operate a diverse mix of
15,320 megawatts of generating capacity in key U.S. energy
markets, will be called Talen Energy Corp and will be listed on
the New York Stock Exchange.
"As PPL has grown its rate-regulated business portfolio
significantly over the past several years, PPL's Energy Supply
business has not -- in our view -- achieved appropriate equity
valuation," PPL's Chief Executive William Spence said in a
Utilities have been shedding plants after a drop in natural
gas costs caused electricity prices to decline. Duke Energy Corp
, the largest U.S. utility owner, said in February it
plans to sell its interest in 13 Midwestern power
PPL said following the spinoff, it will focus on the
regulated utilities it owns and operates in the United Kingdom,
Kentucky and Pennsylvania.
The spinoff is expected to eliminate a number of positions
at plant locations and in corporate support services but PPL did
not provide further details.
The company maintained its 2014 forecast of ongoing earnings
of $2.15 to $2.30 per share, and said it expects 2015 earnings
of $2.05 to $2.25 per share, excluding the supply business.
New York-based private equity company Riverstone, founded in
2000, has committed to $26 billion to 108 investments in the
energy and power sectors, according to its website.
PPL shareholders will receive a pro-rata distribution of
Talen Energy shares based on the number of PPL shares owned, and
the spinoff will have no effect on the ownership of PPL's common
stock and the number of shares outstanding, the companies said.
Upon closing, PPL's shareowners will own 65 percent of Talen
Energy and Riverstone will own 35 percent. PPL will have no
continuing ownership interest in Talen Energy.
The deal does not include the 8,100 megawatts of regulated
generating capacity owned by PPL's Kentucky utilities, which
will continue to be owned and operated by Louisville Gas and
Electric Company and Kentucky Utilities Company.
Paul Farr, PPL's chief financial officer, will be Talen
Energy's Chief Executive, and Jeremy McGuire, PPL's vice
president of strategic development, will become the CFO.
Citigroup Global Markets and Morgan Stanley were financial
advisers to PPL. Riverstone was advised by J.P. Morgan. Simpson
Thacher & Bartlett LLP served as PPL's legal adviser and Vinson
& Elkins was Riverstone's legal counsel.
(Reporting by Supriya Kurane in Bangalore; Editing by Gopakumar