Following through on previously announced plans to deleverage the company’s balance sheet and focus investments in the Americas, Duke Energy said Sunday that it has agreed to sell its Asia-Pacific assets, including all of its pipeline and power generation assets in Australia and New Zealand, to Australian combination utility company Alinta Ltd. for US$1.238 billion (A$1.69 billion).

“The decision was made to exit the Asia-Pacific market either through a sale of our assets or a public offering and, with this transaction, we’re delivering on our plan,” said CEO Paul Anderson, who succeeded Rick Priory last November. “This sale will go a long way towards meeting our asset divestiture target for 2004, and will further strengthen the Duke Energy balance sheet.

“This was a very competitive process and I am pleased that a strong player like Alinta will be taking the business forward,” Anderson added. “Ultimately, the transaction came down to certainty of execution, and Alinta provided the best package in that regard.” Closing is anticipated in the second quarter.

Duke’s Asia Pacific net operating assets include 366 MW of power generation and 1,439 miles of pipeline in Australia and 112 MW of generation from one power plant in New Zealand. The assets include undersea gas pipelines to Tasmania and other pipelines in the eastern Australian state of Queensland.

Standard & Poor’s Ratings Services lauded Duke’s (BBB/Stable/A-2) agreement with Alinta Ltd. because Duke plans on using all of the asset sale proceeds to reduce debt during 2004. The sale will “form the first part of the company’s 2004 debt reduction strategy, which includes total debt reduction of $3.5 billion to $4 billion,” S&P noted.

Duke also plans to sell as many as eight power generation plants (5,300 MW) in Georgia, Mississippi, Kentucky and Arkansas as part of a major restructuring plan announced in January by Anderson. The asset sales are designed to reduce the leverage on Duke’s balance sheet and unload under performing operations.

Hindered by absorbing $3.4 billion in pre-tax charges during the fourth quarter due to actions taken to reduce exposure to merchant generation and international businesses, Duke reported a 2003 net loss of $1.3 billion, or ($1.48) per share, compared to net income of $1 billion, or $1.22 per share in 2002. For the fourth quarter, Duke posted a $2 billion loss, or ($2.23) per share, compared to a $52 million loss, or ($0.06) per share in fourth quarter 2002.

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