San Diego-based Sempra Energy and the Royal Bank of Scotland (RBS) on Thursday said they have sold "most" of the remaining assets in their joint venture trading operation, RBS Sempra Commodities, to JP Morgan Ventures Energy Corp., a unit of JP Morgan Chase & Co. The sale price is approximately $220 million, the partners said.

RBS Sempra said the transaction, which includes all of what are the material assets left in the joint venture, is expected to close in the fourth quarter this year, and it is subject to approval of the Federal Energy Regulatory Commission. Sempra flagged the prospect of a one-time after-tax charge on third quarter earnings in the $50 million to $150 million range.

This sale, together with previously announced sales (see Daily GPI, Sept. 21), effectively will complete the divestiture of the last principal assets of RBS Sempra Commodities, the partners said. There are remaining nonmaterial assets, such as information systems, real estate and employees, along with a few short-term contracts, still to be sold/transfered, but they likely will not be announced publicly, a Sempra corporate spokesperson said.

In February, JP Morgan bought the joint venture's European and Asian operations for $1.7 billion. The sale of the foreign holdings was announced as a prelude to the disposition of the other major part of the business, North American natural gas and power trading (see Daily GPI, Feb. 17).

In the latest sale to JP Morgan, material assets being sold include wholesale natural gas and power trading agreements, as well as over-the-counter and exchange-traded transactions, with counterparties across North America, Sempra and RBS said. They identified the counterparties as natural gas producers, pipeline and storage providers, power plants, regasification facilities, utilities and municipal customers.

Sempra Energy expects its share of the proceeds and related cash distributions to total $1.8-1.9 billion, including about $1.3 billion from the announced transactions, along with $500-600 million of primarily cash and accounts receivable together with net margin that is expected to be collected as customers are transferred to JP Morgan.

"The transfer of all accounts to JP Morgan will be done as soon as possible, but it is expected to continue into 2011," the Sempra spokesperson said.

Cash distributions from the sale are net of expected transition costs and are not expected to fully recover the goodwill included in the carrying value of Sempra Energy's investment in the joint venture, the spokesperson said.

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