Exelon Generation Co. LLC is buying the other half of Sithe New England Holdings LLC from Sithe Energies, Inc. for a $543 million note, plus the assumption of $1.15 billion of project debt. Exelon currently owns 49.9% of the company, which operates 4,400 MW of generation produced by seven gas or gas and oil fired power plants in New England.

“This goes back to when we first invested in Sithe in December 2000,” said Exelon spokesman Ted Caddell. “We’re just buying the rest of the shares of those New England assets.” Caddell noted that the purchase gives Exelon more control over power generation in a region in which it has no other generation assets. “We’ve long said we wanted to gain entry to the Northeast market, and this acquisition will more quickly solidify our position in that growing market,” he said.

The facilities covered under the transaction include 2,050 MW of power plants in operation and 2,421 MW under construction. The units under construction are expected to be completed in late 2002.

In addition to the asset purchase, Exelon and Sithe’s other shareholders are considering entering into additional transactions to restructure the original Sithe deal, although to date no agreement has been reached. The company told the Securities and Exchange Commission that this restructuring would include the acquisition of only the assets in the Sithe portfolio that fit Exelon’s strategy. The size of the transaction and the amount of Exelon debt required to finance the acquisition might be reduced. The restructuring also could allow Exelon to more quickly integrate the Sithe assets and achieve steady-state staffing and cost levels — accelerate realization of acquisition synergies. In addition to the economic and operating reasons, the restructured transaction could allow Exelon to integrate the Sithe assets in a tax-efficient manner, the company told the SEC.

Exelon has negotiated closing conditions to the acquisition agreement that create flexibility to terminate the purchase if certain events do not happen as contemplated. The acquisition is not expected to affect Exelon’s earnings guidance for 2002, the company added.

The company is seeking FERC and other required approvals by Oct. 31, 2002. If approved, the transaction could be completed in November.

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