AEP to Sell Four Merchant Power Plants to Blackstone and ArcLight Joint Venture

American Electric Power announced today that it has signed an agreement to sell four competitive power plants totaling approximately 5,200 megawatts (MW) for approximately $2.17 billion to a newly formed joint venture of Blackstone and ArcLight Capital Partners LLC

The sale agreement includes:

• Lawrenceburg Generating Station, 1,186 MW natural gas, Lawrenceburg, Indiana

• Waterford Energy Center, 840 MW natural gas, Waterford, Ohio

• Darby Generating Station, 507 MW natural gas, Mount Sterling, Ohio

• Gen. James M. Gavin Plant, 2,665 MW coal, Cheshire, Ohio

AEP announced in January 2015 that the company was exploring strategic alternatives for these power plants, including a potential sale. All of this generating capacity is located in the region served by the PJM Interconnection.

"AEP’s long-term strategy has been to become a fully regulated, premium energy company focused on investment in infrastructure and the energy innovations that our customers want and need. This transaction advances that strategy and reduces some of the business risks associated with operating competitive generating assets," said Nicholas K. Akins, AEP chairman, president and chief executive officer.

The sale is expected to close in the first quarter of 2017. AEP expects to net approximately $1.2 billion in cash after taxes, repayment of debt associated with these assets and transaction fees.

The company is evaluating options and will share details about its plans for investment of the proceeds from this transaction at an analyst day Nov. 1. These plans may involve reinvestment in its regulated businesses, including transmission; renewable projects; additional debt retirement; and share buybacks.

AEP expects to record an after-tax gain of approximately $140 million from the sale, subject to inventory true-ups, income tax and other adjustments.

The sale is subject to regulatory approvals from the Federal Energy Regulatory Commission, the Indiana Utility Regulatory Commission and federal clearance pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976.