MIC (Macquarie Infrastructure Corporation) announced that it has entered into an agreement to sell 100% of the Bayonne Energy Center (“BEC”) power generation facility in Bayonne, New Jersey for approximately $900 million in cash and assumed debt. The transaction is expected to close in the fourth quarter of 2018, subject to receipt of customary regulatory and other approvals.

BEC is a 644 megawatt, gas-fired, mid-merit electricity generation facility constructed in 2012 and expanded in 2018. It distributes power into New York City via a cable that runs from Bayonne, NJ beneath New York Harbor to a substation in Brooklyn, NY. MIC acquired BEC in 2015 and operates the business on land owned by its International-Matex Tank Terminals (“IMTT”) business.

The transaction values BEC at approximately $1,400 per kilowatt of generating capacity.

“Having completed various capacity and capability expansion projects at BEC, we concluded that this was an appropriate time to sell the facility and redeploy the proceeds to address strategic priorities including strengthening our balance sheet,” said Christopher Frost, chief executive officer of MIC.

MIC anticipates using part of the net proceeds of approximately $650 million, after transaction fees and expenses, to reduce debt including $150 million outstanding on the revolving credit facility at the Company’s IMTT business. MIC expects its ratio of net debt to EBITDA to be less than 4.5 times at year end 2018.

Proceeds not used to reduce debt will be available to fund a portion of MIC’s planned growth capital deployments. The MIC Board will consider options for returning any excess capital to shareholders.

MIC expects taxable gain from the sale of BEC to utilize the majority of its federal prior year Net Operating Loss carry-forward although the Company expects to be able to offset future federal taxable income with the tax benefits associated with planned growth capital deployments.

Tags:
M&A   Macquarie Infrastructure Corporation   Macquarie  

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