Calpine selling southeastern power plants for $1.6B

HOUSTON — Houston power generator Calpine Corp. is selling power plants in the southeastern United States for $1.57 billion, a move it says could help focus its efforts in wholesale power markets in Texas, California and elsewhere, the company said Friday.

It’s selling 3,500 megawatts of “non-core” generating capacity in Alabama, Florida, Louisiana and other southeastern states. One megawatt is enough to power 500 homes in normal conditions.

Calpine CEO Jack Fusco said monetizing the company’s southeastern U.S. power plants is one of its top priorities as it focuses on wholesale markets elsewhere.

Selling the revenue-generating assets means Calpine will lose $100 million on its 2014 earnings before interest, taxes, depreciation and amortization. But it will gain $1.53 billion in cash because it is using net operating losses it had when it emerged from bankruptcy to offset taxable gains. Calpine emerged from a three-year Chapter 11 bankruptcy in 2008.

The company will “continue to be opportunistic in our deployment of the capital generated from this sale, whether paying down debt, investing in acquisition or development opportunities or repurchasing our own shares of common stock,” Fusco said.

Calpine, one of the largest wholesale power generators with several natural gas-fired and geothermal power plants, said it will also look to sell its remaining four southeastern power plants in Arkansas, Alabama and Florida, which represent a combined 1,700 megawatts of power capacity.

The buyer, New York-based power generator operator LS Power, is expected to sign the deal in the second quarter.

The company agreed in December to purchase a San Antonio power plant for $625 million, as it looks to build its footprint in the state.

Markets were closed Friday. Calpine shares closed at $21.37 on the New York Stock Exchange on Thursday.