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Tenaska Regains Control of Gas Marketing Arm

Tenaska Inc. has regained full control of its natural gas marketing arm, Tenaska Marketing Ventures (TMV), after completing a half-stake repurchase from affiliates of American International Group Inc. (AIG). Financial details of the purchase, which included Tenaska Gas Storage and Tenaska Marketing Canada, were not disclosed.

Like many other financial institutions that then were eager to gain stakes in the physical energy markets, AIG affiliates in 2007 acquired a 50% interest in TMV, which until then had been wholly owned by privately held Tenaska (see NGI, March 19, 2007). The joint venture combined AIG's then-financial strength and risk management capabilities with Tenaska's physical gas marketing expertise.

Tenaska, which was founded in 1991, saw its trading arm continue to flourish under the AIG partnership. In 3Q2008, the company sold 5.5 Bcf/d of gas in North America and was ranked ninth in NGI's quarterly survey of gas marketers. However, AIG was forced to restructure its business last fall as the financial markets collapsed, and in early December Tenaska said it was repurchasing AIG's TMV stake (see NGI, Dec. 8, 2008).

"We control our own destiny now," TMV President Fred Hunzeker told NGI last month. "We were well positioned to run it before AIG became a partner and we're in even better shape now."

Tenaska's employee-owners plan to use the company's corporate balance sheet, plus a five-year $1 billion revolving line of credit, to support the trading arm's operations, company officials said.

"The combination of the outstanding team operating TMV and the strength of Tenaska's reputation and balance sheet means TMV is positioned to continue its record of growth and success," said Tenaska CFO Jerry Crouse.

TMV is interested in securing another venture partner if circumstances permit, Hunzeker said last month. But without a partner, TMV's business model remains sound, he said. With the upheaval in the financial markets, "there are a lot of opportunities out there to dial up the growth a little bit, and I think sooner rather than later would be good for grabbing more growth, with more investors on board."

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