Global Infrastructure Partners (GIP) will buy NRG’s ownership in NRG Yield and its renewables platform for $1.375 billion in cash, according to reports. Meanwhile, NRG also agreed to sell its South Central business to Cleco Corporate Holdings for close to $1 billion.
The combined deals will relieve NRG of conventional, thermal and renewable power assets throughout the U.S. NRG Yield also will take hold of its onetime parent’s interest in the 527 MW Carlsbad Energy Center and 154 MW Buckthorn Solar in California and Texas, respectively, for cash proceeds of $407 million.
“Today’s announcement represents a significant milestone in simplifying our value proposition, optimizing our portfolio, and strengthening our balance sheet to create significant shareholder value,” said Mauricio Gutierrez, NRG CEO (pictured). “These sale processes were rigorous and highly competitive. I am pleased with the outcome and confident in our ability to work with our counterparties to bring these transactions to a swift close.”
In July 2017, NRG announced its intention to sell close to $4 billion in assets to help address major debt issues. Potential buyers such as NextEra Energy, John Hancock Insurance, Blackstone and KKR & Co. were reportedly interested in the assets.
The New Jersey firm has struggled with heavy leverage for years, citing as much as $20 billion in long-term debt three years ago, according to reports. NRG reported nearly $900 million in net losses for 2016.
Third quarter 2017 earnings indicated the company’s revenues were down 11 percent from the same period a year earlier.
The transaction with Global Infrastructure Partners is expected to close in the second half of the year and is subject to various customary closing conditions and regulatory approvals.
The Carlsbad Energy Center and Buckthorn Solar drop downs to NRG Yield are expected to close before year-end and are subject to both projects achieving commercial operations status as well as various customary closing conditions and approvals.
As part of the sale of NRG’s interest in NRG Yield, NRG and NRG Yield agreed to maintain an agreement for NRG’s remaining 102 net MW ownership in Agua Caliente, and also amended the ROFO agreement to remove Ivanpah as a ROFO asset.
With NRG’s South Central business Cleco Corporate Holdings LLC will acquire a 3,555 MW portfolio of generation assets consisting of Louisiana’s 225 MW Bayou Cove, 430 MW Big Cajun-I and 1,461 MW Big Cajun-II, as well as the gas-fired, combined-cycle 1,263 MW Cottonwood in east Texas and 176 MW Sterlington gas-fired plant also in Louisiana.
The transaction is expected to close in the second half of the year and is subject to various customary closing conditions, approvals and consents.
Wednesday’s announcement brings NRG’s cumulative transformation plan asset sales to $2.9 billion in anticipated cash proceeds, including about $150 million of asset monetization closed in the second half of 2017.
NRG expects to announce additional asset sales over the course of 2018 and is revising its total asset sales cash proceeds target to about $3.2 billion.