COLUMBUS, Ohio, Oct. 1, 2015 /PRNewswire/ -- American Electric
Power (NYSE: AEP) has signed an agreement to sell its commercial
barge transportation subsidiary, AEP River Operations LLC, to
American Commercial Lines (ACL), owned by Platinum Equity, for
approximately $550 million.
AEP River Operations is a commercial inland barge company
delivering about 45 million tons of products annually, including 10
million tons of coal. AEP River Operations has 56 towboats, 2,301
barges and 1,090 employees. The company is headquartered in
Chesterfield, Missouri, with
operations in Paducah, Kentucky,
and Convent, Algiers and Belle
Chasse, Louisiana.
AEP announced in March that the company was exploring strategic
alternatives for AEP River Operations, including a potential sale.
AEP acquired the business, formerly known as MEMCO, in 2001 from
Progress Energy.
"AEP is focused on delivering customer and shareholder value as
a regulated utility company. AEP River Operations has an incredible
legacy of success, but operating a commercial barge transportation
company no longer fits well with our strategy," said Nicholas K. Akins, AEP chairman, president and
chief executive officer.
"ACL has been in the barge transportation business for 100 years
and is one of the premier liquid and dry cargo barge lines in the
country. ACL shares our commitment to safety and customer service,
and several members of their management team know first-hand the
exceptional value and potential of AEP River Operations' employees
and fleet," Akins said.
Upon close of the sale, ACL will acquire AEP River Operations by
purchasing all the stock of AEP Resources, the parent company of
AEP River Operations. ACL will assume all assets and liabilities of
AEP River Operations.
AEP expects to net approximately $400
million in cash after taxes, debt retirement and transaction
fees. The company will invest the proceeds in its regulated
business. AEP expects to record a net gain of approximately
$125 million from the sale in the
fourth quarter of 2015, subject to working capital and other
adjustments.
The sale of AEP River Operations is subject to regulatory
approval including federal clearance pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976. The sale is
expected to close in the fourth quarter of 2015. Morgan Stanley was
the advisor for AEP during the strategic evaluation of AEP River
Operations.
AEP will retain ownership of its captive barge fleet that
delivers coal to the company's regulated coal-fueled power plants
owned by Appalachian Power, Kentucky Power and Indiana Michigan
Power. AEP has signed a contract with ACL to dispatch and operate
AEP's captive barge fleet through the end of 2016. The captive
barge fleet delivers about 19 million tons of coal annually to
AEP's regulated power plants. The fleet has 12 towboats, 498 barges
and 229 employees.
AEP is still conducting an independent strategic evaluation of
its competitive generation business. No decision has been made
about the future of that business.
American Electric Power is one of the largest electric utilities
in the United States, delivering
electricity to nearly 5.4 million customers in 11 states. AEP ranks
among the nation's largest generators of electricity, owning nearly
32,000 megawatts of generating capacity in the U.S. AEP also owns
the nation's largest electricity transmission system, a more than
40,000-mile network that includes more 765-kilovolt extra-high
voltage transmission lines than all other U.S. transmission systems
combined. AEP's transmission system directly or indirectly serves
about 10 percent of the electricity demand in the Eastern
Interconnection, the interconnected transmission system that covers
38 eastern and central U.S. states and eastern Canada, and approximately 11 percent of the
electricity demand in ERCOT, the transmission system that covers
much of Texas. AEP's utility units
operate as AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West
Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan Power, Kentucky
Power, Public Service Company of Oklahoma, and Southwestern Electric Power
Company (in Arkansas, Louisiana and east Texas). AEP's headquarters are in Columbus, Ohio.
This report made by American Electric Power and its Registrant
Subsidiaries contains forward-looking statements within the meaning
of Section 21E of the Securities Exchange Act of 1934. Although AEP
and each of its Registrant Subsidiaries believe that their
expectations are based on reasonable assumptions, any such
statements may be influenced by factors that could cause actual
outcomes and results to be materially different from those
projected. Among the factors that could cause actual results to
differ materially from those in the forward-looking statements are:
the economic climate, growth or contraction within and changes in
market demand and demographic patterns in AEP's service territory;
inflationary or deflationary interest rate trends; volatility in
the financial markets, particularly developments affecting the
availability of capital on reasonable terms and developments
impairing AEP's ability to finance new capital projects and
refinance existing debt at attractive rates; the availability and
cost of funds to finance working capital and capital needs,
particularly during periods when the time lag between incurring
costs and recovery is long and the costs are material; electric
load, customer growth and the impact of competition, including
competition for retail customers; weather conditions, including
storms and drought conditions, and AEP's ability to recover
significant storm restoration costs; available sources and costs
of, and transportation for, fuels and the creditworthiness and
performance of fuel suppliers and transporters; availability of
necessary generating capacity and the performance of AEP's
generating plants; AEP's ability to recover increases in fuel and
other energy costs through regulated or competitive electric rates;
AEP's ability to build or acquire generating capacity and
transmission lines and facilities (including the ability to obtain
any necessary regulatory approvals and permits) when needed at
acceptable prices and terms and to recover those costs; new
legislation, litigation and government regulation, including
oversight of nuclear generation, energy commodity trading and new
or heightened requirements for reduced emissions of sulfur,
nitrogen, mercury, carbon, soot or particulate matter and other
substances, or additional regulation of fly ash and similar
combustion products that could impact the continued operation, cost
recovery, and/or profitability of AEP's generation plants and
related assets; evolving public perception of the risks associated
with fuels used before, during and after the generation of
electricity, including nuclear fuel; a reduction in the federal
statutory tax rate that could result in an accelerated return of
deferred federal income taxes to customers; timing and resolution
of pending and future rate cases, negotiations and other regulatory
decisions, including rate or other recovery of new investments in
generation, distribution and transmission service and environmental
compliance; resolution of litigation; AEP's ability to constrain
operation and maintenance costs; AEP's ability to develop and
execute a strategy based on a view regarding prices of electricity
and other energy-related commodities; prices and demand for power
that AEP generates and sells at wholesale; changes in technology,
particularly with respect to new, developing, alternative or
distributed sources of generation; AEP's ability to recover through
rates or market prices any remaining unrecovered investment in
generating units that may be retired before the end of their
previously projected useful lives; volatility and changes in
markets for capacity and electricity, coal, and other
energy-related commodities, particularly changes in the price of
natural gas and capacity auction returns; changes in utility
regulation and the allocation of costs within regional transmission
organizations, including ERCOT, PJM and SPP; the transition to
market for generation in Ohio,
including the implementation of ESPs and AEP's ability to recover
investments in its Ohio generation
assets; AEP's ability to successfully and profitably manage its
separate competitive generation assets; changes in the
creditworthiness of the counterparties with whom AEP has
contractual arrangements, including participants in the energy
trading market; actions of rating agencies, including changes in
the ratings of AEP debt; the impact of volatility in the capital
markets on the value of the investments held by AEP's pension,
other postretirement benefit plans, captive insurance entity and
nuclear decommissioning trust and the impact of such volatility on
future funding requirements; accounting pronouncements periodically
issued by accounting standard-setting bodies; and other risks and
unforeseen events, including wars, the effects of terrorism
(including increased security costs), embargoes, cyber security
threats and other catastrophic events.
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SOURCE American Electric Power