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Capital Power CEO Brian Vaasjo (John Ulan/Epic Photogaphy Inc.)
Capital Power CEO Brian Vaasjo (John Ulan/Epic Photogaphy Inc.)

Capital Power sells New England plants, refocuses on Alberta Add to ...

Capital Power Corp. is selling assets in the United States – a deal that will result in a loss related to the transaction – and shuttering offices in order to focus its business on Alberta.

The company, a power producer based in Edmonton, on Wednesday announced plans to sell three combined cycle, natural-gas fired power plants in New England for $541-million (U.S.). Capital Power plans to wind down its commodity and energy trading business outside Alberta by the end of the year, closing its office in Toronto immediately and its Chicago office next year. Teams in Alberta, Boston and San Diego will continue.

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Despite selling three assets for over half a billion dollars, the sale will hurt the company in the short term.

After closing costs, tax expense and foreign exchange gains, the company expects to record a small loss related to the transaction,” Capital Power said in a statement.

Emera Inc. purchased the three power plants and the deal, which needs regulatory approval, is expected to close in the fourth quarter. Capital Power said the sale will reduce its risk, lower costs, focus the company, and make the company’s financial results more stable.

“The sale proceeds for the New England assets will be redeployed to reduce our merchant risk profile and provide more predictable earnings and cash flow,” Brian Vaasjo, Capital Power’s chief executive, said in a statement. “While we will continue to pursue contracted power generation opportunities throughout North America, growth in our merchant power business and our trading activities will now be focused on North America's strongest power market, Alberta.”

Capital Power will take a $10-million hit in the third-quarter because of restructuring charges.  The overall effect of the restructuring, save for the sale of the three plants, will reduce annual spending by about $25-million to $30-million, the company said.

Morgan Stanley & Co. LLC and law firm Dentons LLP advised Capital Power.

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