Southern Energy to Spin-off in April 2001
In what appears to be a trend toward issuing stock in generation
subsidiaries, Southern Company's CEO A.W. "Bill" Dahlberg announced
that he will seek approval from the board of directors to
completely spin-off the company's Southern Energy subsidiary.
The move follows the company's previously announced intentions
to spin-off its remaining 80% ownership in the subsidiary to the
company's shareholders between April and Sept. 2001. The company
hopes that the separation will take place on or about April 2,
The trend of spinning-off generation subsidiaries in the energy
industry is not new, but is just beginning to heat up. Xcel Energy
successfully issued stock in NRG Energy back in May, and analysts
with Deutsche Banc believe others will attempt to reap added value
by issuing IPOs for their generation subsidiaries. The firm points
out that in addition to Southern Energy completing its initial
public offering (IPO) on its common stock in October, other
industry leaders are now following the lead (see NGI, Nov. 20).
Constellation Energy and Reliant Energy have already announced
similar IPO plans for early 2001. Deutsche Banc believes other
candidates prime for IPOs include: Allegheny Energy; American
Electric Power,; Duke Energy; Edison International; Entergy Corp.;
Exelon Corp.; FPL Corp.; PG&E Corp.; PPL Corp.; Public Service
Enterprise Group and UtiliCorp United.
Southern Energy received total gross proceeds in the amount of
$1.8 billion from its 20% IPO, and a concurrent securities
offering. Currently the parent company holds 272 million shares
(80%), of the outstanding shares of Southern Energy. 66.7 million
shares (20%) are privately held.
The spin-off must receive several approvals including Southern
Company's board of directors, which will consider the plan based on
general market conditions among other things.
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