Reliant Energy last week said it has entered into a definitive agreement with Brascan Corp. to sell it 770 MW of power generation assets located in upstate New York for $900 million in cash, subject to certain closing adjustments.

The portfolio of generation assets involved in the sale includes 71 hydropower plants in upstate New York as well as the Carr Street Generating Station, a fossil-fueled, combined-cycle cogeneration plant in East Syracuse, NY. Reliant acquired these assets in February 2002 as part of its purchase of Orion Power Holdings.

The transaction is subject to various regulatory approvals, including the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the Federal Energy Regulatory Commission, the New York Public Service Commission, as well as certain third-party consents and approvals. Reliant expects the transaction to close in the third quarter of 2004.

“The sale of our upstate New York assets is consistent with our previously announced goal to strengthen our balance sheet through the sale of assets in non-core regions where we can realize a fair value,” said Joel Staff, Reliant Energy’s chairman. “Restoring financial flexibility is a key element of our strategy for repositioning the company to succeed in the merchant power industry.”

Reliant will use the proceeds from the transaction to repay bank debt associated with its Orion Power New York and Orion Power Midwest subsidiaries. After the application of the proceeds from this transaction, Reliant Energy will have reduced net debt by nearly $3.0 billion since Sept. 30, 2003.

Reliant expects to record a significant gain upon the close of the sale. Prior to closing, these assets will be treated as discontinued operations. The company expects the transaction, excluding the gain on the sale, to be slightly accretive to earnings per share from continuing operations in 2004 and beyond.

Goldman, Sachs & Co. acted as financial advisor and Vinson & Elkins L.L.P. provided legal services to Reliant Energy in connection with the sale.

Brascan is an asset management company with a focus on real estate and power generation. The company has direct investments of $17 billion and a further $7 billion of assets. Brascan’s portfolio of power generation assets includes more than 40 facilities, primarily hydroelectric operations located in the Northeast.

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