Mirant sells U.K. assets to PPL Corp.

Mirant announced the sale of its 49 percent economic interest in and shared management control of, Western Power Distribution Holdings Limited and WPD Investment Holdings (both identified jointly as WPD) to PPL Corp. for $235 million. The sale will result in approximately $228 million in net proceeds to Mirant after payment of taxes and other transaction-related fees. The WPD assets, in which PPL had a 51 percent economic interest, include the electricity distribution networks for Southwest England and South Wales. WPD was Mirant's final remaining investment in the U.K. Earlier in the year, Mirant announced two phases of asset sales that would total between $2.3 billion and $2.6 billion. With this sale, it has raised over $1.7 billion toward that goal.

Duke Energy delays plants

Duke Energy Corp. has stopped construction on its 620 MW Grays Harbor plant in Washington and its 608 MW Luna plant in New Mexico. These plants were scheduled to come on line in mid-2003. According to Standard and Poor's, Duke is evaluating the economics of completing and subsequently running these facilities in light of regional oversupply and the attendant slump in wholesale energy prices. If the plants are delayed, S&P would look past this temporary situation. If the plants are cancelled, capital would not be spent to complete them, which may reduce debt-financing needs. The construction-related savings would be minimized by cancellation penalties, the figures for which are not available.

Foster Wheeler secures new financing

Foster Wheeler Ltd. obtained new credit arrangements that include a $290 million secured load and a revolving credit facility that matures in April 2005. The new facilities will provide $82 million in increased liquidity to the company. As a result of securing the new credit facilities, $904 million of the company's $1.1 billion in outstanding debt, previously classified as current, has been reclassified as long-term. Foster Wheeler also said it has entered into a $40 million receivables sale agreement that matures in August 2005, and has replaced its previous lease financing facility associated with its Clinton, NJ headquarters complex.

Entergy seeks to boost debt registration

Dow Jones reported that Entergy intends to raise the amount of debt it can offer under a previously filed shelf registration statement by $500 million to $2 billion. Entergy said it filed under the Public Utility Holding Company Act in April 2001 to offer $1.5 billion of debt in the form of notes and commercial paper. It will use net proceeds from any offering for general corporate purposes, including capital expenditures, the repurchase of company securities and working capital expenses.

Credit quality lies in market forecasts, not market prices

The market forecast is a useful tool in assessing the likely financial performance of merchant power assets, but it is inappropriate to view the market forecast as a prophet of market prices, according to a report published by Fitch Ratings. "Market forecasts are developed with a long-term perspective of the underlying value of energy—the price that energy should be. In this context, the forecast provides meaningful insight into marketplace dynamics and a specific asset's competitive position," said Doug Harvin, senior director, Fitch Ratings. "Market prices are volatile, and are expected to fluctuate around the pricing levels suggested in the base case market forecast. Financial performance under stress scenarios gives a more meaningful picture of credit quality than base case projections, and Fitch's ratings are more closely related to the performance in the stress cases than in the base case."

RETX receives new investment capital

RETX, provider of Web-based solutions, has been approved for an investment of more than $3 million from Canadian telecommunications company, SaskTel. The investment will be used by RETX to continue the growth of its customer base among electric utilities, ISOs and other retail electric energy services. The investment will also allow the company to further develop enhancements to its present products to better address the requirements for the new Standard Market Design (SMD) announced by FERC in its July 31, 2002, Notice of Proposed Rulemaking (NOPR).

SNWA eyes purchase of Nevada Power

The Southern Nevada Water Authority (SNWA) reaffirmed its late August offer to purchase Nevada Power Co. from Sierra Pacific Resources for about $3.2 billion in cash and assumed debt. On September 12, Sierra Pacific Resources called the SNWA proposal to acquire its Nevada Power unit "an unrealistic transaction" because the agency has no sufficient financing plan. SNWA's board met on September 19 with Morgan Stanley and SNWA's legal team to discuss Sierra Pacific's response and directed the general manager of SNWA to reaffirm SNWA's offer to buy Nevada Power for $1.2 billion in cash plus the assumption of $2 billion in debt.