Canadian Press: Shell sells InterGen unit for US$1.75B to AIG, Ontario Teachers' Pension Plan: “Royal Dutch/Shell Group of Cos. is selling its InterGen NV power-plant business to the private-equity arms of American International Group Inc. and the Ontario Teachers' Pension Plan for $1.75 billion US (ShellNews.net) Posted 20 April -05
NEW YORK (CP) - Royal Dutch/Shell Group of Cos. is selling its InterGen NV power-plant business to the private-equity arms of American International Group Inc. and the Ontario Teachers' Pension Plan for $1.75 billion US.
The sale of Burlington, Mass.-based InterGen, which is 68 per cent owned by Shell and the rest by a unit of Bechtel Group Inc., includes 10 power plants in the United Kingdom, the Netherlands, Mexico, the Philippines, China and Australia.
The deal, with AIG and Ontario Teachers as equal partners, is expected to close in mid-2005.
Shell and partner Bechtel, of San Francisco, are keeping other plants in the United States, Colombia and Turkey, the companies said.
"This is an excellent opportunity to build on our existing portfolio of power generation assets that we currently own in partnership with AIG," Ontario Teachers' senior vice-president Jim Leech said in a release.
The Toronto-based Ontario Teachers fund last year took part in a group that bought some of National Grid Transco PLC's British gas distribution networks.
"InterGen has a well diversified international portfolio of new and efficient power assets," Leech said.
"As most of the power from these plants is sold under long-term contract, this investment should produce stable and long-term cash flows that are well suited to our growing infrastructure portfolio."
With net assets of more than $64 billion, the Ontario Teachers' Pension Plan manages the retirement income of 154,000 teachers, 93,000 retired teachers and 91,000 former teachers. Its many other holdings include the Cadillac Fairview property company and Maple Leaf Sports and Entertainment.
Shell, along with many of its Big Oil peers, has been dumping non-core assets to focus on developing new oil reserves and returning cash to investors.
The energy giant is still trying to focus its operations after the turmoil caused by an energy-reserve accounting scandal last year. In September, it promised investors it would shed as much as $12 billion worth of businesses through next year.
Among other units, Shell is selling its British liquefied petroleum-gas unit and a chemicals joint venture, Basell, owned with BASF AG.
The deal reflects how private-equity firms have emerged as well-funded market players eager to put their money to work acquiring even utilities, once considered the epitome of highly regulated, staid businesses which financial buyers would avoid.
In recent weeks, investment funds have snapped up Toys "R" Us Inc. for about $6.6 billion and SunGard Data Systems Inc. for $11.3 billion.
Buyout funds are often able to outbid companies that have a more strategic rationale for making the purchase because they are willing to borrow heavily to finance the deal.
New York-based AIG is an insurer with assets of $776.42 billion US as of Sept. 30.
In afternoon New York Stock Exchange trading, shares of Royal Dutch Shell edged up 56 cents, or 0.94 per cent, to $59.88.
Shares of AIG gained 36 cents, or 0.7 per cent, to $51.62.
http://www.canada.com/businesscentre/story.html?id=85c4dc4c-6bc2-4bb5-bbed-74d1b0dd0aef
Click here for ShellNews.net HOME PAGE