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Centrica Unit Selling Three Gas-Fired Generators in Texas

Centrica plc North American subsidiary Direct Energy will sell three natural gas-fired power stations in Texas to The Blackstone Group LP for $685 million in cash, the UK utility said Wednesday.

The three units, located in Paris, Bastrop and Mission, have a combined capacity of 1,295 MW. As part of the transaction, Direct Energy has entered into a three-year call option arrangement for an equivalent amount of capacity with Blackstone.

"This transaction allows us to realize value from our gas-fired fleet while ensuring stability of price and supply in the Texas power market through the call option arrangement," said Direct Energy CEO Badar Khan.

The transaction, which is subject to customary regulatory approvals, is expected to close in 1Q2014. Proceeds from the sale will be returned to shareholders through a $685 million extension of Centrica's share repurchase program in 2014.

Direct Energy acquired the 540 MW Bastrop and 495 MW Mission power stations in 2004, and the 260 MW Paris facility two years later.

The sale is the third major transaction Centrica has announced in North America this year. In July, Direct Energy Business agreed to acquire Hess's New Jersey-based energy marketing business for $731 million in cash and approximately $300 million in net working capital (see Daily GPI, July 31). And three months before that, a North American partnership of Centrica and Qatar Petroleum International agreed to pay Suncor Energy $986 million for onshore natural gas-weighted properties in the Western Canadian Sedimentary Basin (see Daily GPI, April 16).

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