GenOn Energy Inc. agreed to sell its Canal units 1 and 2 generating facilities to Stonepeak Kestrel Holdings LLC as part of its chapter 11 reorganization plan.
The Canal oil-fired units are located in Barnstable County, Mass., and have a combined summer capacity rating of approximately 1,112 MW, according to a March 23 news release.
Stonepeak Kestrel Holdings is an affiliate of the New York-headquartered private equity firm Stonepeak Infrastructure Partners.
The transaction is supported by a majority of the noteholders of GenOn affiliates and is expected to close early in the third quarter of 2018.
GenOn expects total proceeds of $390.3 million, including a $320 million closing purchase price, an estimated working capital of $32.5 million, a $13.5 million anticipated refund from NRG Energy Inc. in connection with its Canal 3 option and estimated $24.3 million post-closing excess fuel inventory payments.
Under one of the Canal 3 options, a refund will be given upon the closing of a third-party sale of the facility. GenOn said a Stonepeak Kestrel Holdings affiliate agreed to purchase Canal 3 directly from an NRG Energy affiliate.
The closing purchase price is subject to adjustment for net working capital of the business as of the closing date, and an upward adjustment of $13.5 million if the Canal 3 transaction falls through due to debt financing failure.
A federal bankruptcy court confirmed GenOn's reorganization plan in December 2017, allowing the company to execute third-party asset sales and/or reorganize. The company estimates that it will realize $910.3 million of gross cash proceeds from the sale of the Canal assets and its previously announced deal for its Hunterstown CC facility in Pennsylvania, with an additional $24.3 million of post-closing excess inventory payments within the next two years.
GenOn said it continues to explore and evaluate value-maximizing alternatives for its remaining assets.