Sempra Energy announced that it has entered into an agreement to sell its U.S. non-utility operating solar assets, solar and battery storage development projects and one wind facility to a non-utility subsidiary of Consolidated Edison, Inc. for $1.54 billion in cash, subject to adjustments for working capital and pre-closing cash contributions.

The projects have $576 million of existing project debt.

In addition to the assets included in this sale, Sempra Energy intends to sell the rest of its non-utility U.S. wind and certain U.S. midstream natural gas assets.

"This sale represents an important step forward in the portfolio-optimization plan we announced in June to support market growth opportunities," said Joseph A. Householder, president and chief operating officer of Sempra Energy.

The assets included in the sale to Consolidated Edison are: Mesquite Solar 2 and 3 in Arizona; Copper Mountain Solar 1 and 4 in Nevada; Great Valley Solar in California; and solar and battery storage development projects. Additionally, Consolidated Edison will acquire the facilities jointly owned with Sempra Renewables including: Mesquite Solar 1; Copper Mountain Solar 2 and 3; the Alpaugh, Corcoran and White River solar facilities in California; and the Broken Bow II wind facility in Nebraska.

The sale comprises approximately 980 megawatts AC of installed capacity in Sempra Energy's non-utility renewables portfolio. All of the existing projects sell electricity under long-term agreements with investment-grade utilities or municipalities. The sale is expected to be completed near the end of 2018.

The acquisition will increase Con Edison’s utility-scale, renewable energy production portfolio to approximately 2,600 MW AC, of which 85 percent is solar and 15 percent is wind.

Con Edison expects to finance the purchase price for the acquisition with a combination of $715 million of equity and $825 million of long-term, non-recourse debt.

Assuming that the acquisition closes in 2018, Con Edison estimates that the effect of the acquisition on GAAP earnings will be: accretive in 2018 (approximately $0.50 per share), due primarily to purchase accounting adjustments; dilutive in 2019 (approximately $0.25 per share) and 2020 (approximately $0.15 per share), due primarily to accounting for existing third-party tax equity investments in certain of the projects being acquired; and accretive thereafter.

For the year of 2018, Con Edison reaffirms its previous forecast of adjusted earnings per share of $4.15 to $4.35 per share. Adjusted earnings per share exclude purchase accounting adjustments for the acquisition.

The sale is subject to customary closing conditions and consents, including approvals of the Federal Energy Regulatory Commission and the U.S. Department of Energy, and expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.

Tags:
M&A   Sempra   Solar   ConEd   Consolidated Edison Inc.  

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