Kelson Holdings to Sell 1,230 MW Redbud Power Plant to OG&E
Published January 22nd, 2008
Kelson Holdings LLC (”Kelson” or the “Company”) announced today that it has signed a definitive agreement with Oklahoma Gas & Electric Company (”OG&E”), the regulated subsidiary of OGE Energy Corp. , to sell its 100% interest in the 1,230 MW Redbud power plant near Luther, Oklahoma for $852 million. OG&E, in turn, has signed a definitive agreement with the Grand River Dam Authority (”GRDA”) and the Oklahoma Power Municipal Authority (”OMPA”) to immediately sell-down partial stakes in Redbud upon closing its transaction with Kelson. The transaction is subject to various closing conditions and regulatory approvals.
“The sale of our Redbud power plant to OG&E reflects Kelson’s strategy of acquiring assets at a discount to their intrinsic value, improving their operating and financial performance and then divesting when we can realize a full and fair price,” said Neal Cody, Kelson Holdings President. “We believe that new-build costs for power plants in the regions in which we operate have increased dramatically over the past several years, and the $693/kW purchase price for Redbud reflects a discount to actual replacement cost.”
Additionally, a Kelson affiliate, Kelson Energy III, LLC (”Kelson III”), was recently approved as the stalking horse bidder in the proposed sale of Southaven Power LLC’s (”Southaven”) assets at a bankruptcy auction. Southaven is an 810 MW combined-cycle natural gas-fired power plant located in DeSoto County, Mississippi. Mr. Cody added that Southaven is a natural fit with the existing Kelson portfolio of assets given its location, technology, fuel source and merchant operating status. “Should Kelson III ultimately be the successful bidder for Southaven, it would represent another opportunity for us to execute on our strategy to create value for our investors through the acquisition of an attractively valued asset.”
The sale of Redbud and potential acquisition of Southaven reflect the Company’s ongoing evaluation of strategic alternatives, announced in October 2007, which continues as declining reserve margins across the United States support expanding valuations for existing generation assets. Kelson has hired Goldman, Sachs & Co. as lead advisor and Merrill Lynch & Co. as co-advisor to assist it with its strategic review.
About Kelson
Kelson is a leading independent power producer engaged in the business of owning and operating electric generating facilities. Kelson currently owns or leases four combined-cycle gas-fired facilities located in SPP and SERC having an aggregate total capacity of 4,002 MWs. Kelson is indirectly and wholly- owned by the Harbinger Capital Partners Funds.
About the Harbinger Capital Partners Funds
The Harbinger Capital Partners Funds are New York-based hedge funds with combined assets under management of approximately $18 billion.
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