Summary
American Electric Power Company, Inc. (AEP) has amended its Stock Purchase Agreement to sell its Kentucky Power Company (KPCo) and AEP Kentucky Transmission Company, Inc. (KTCo) subsidiaries to Liberty Utilities Co. The most significant change is a reduction in the purchase price from approximately $2.85 billion to $2.646 billion. This price adjustment, coupled with an anticipated delay in closing, means AEP expects to receive about $1.2 billion in cash, net of taxes and fees, down from a previous expectation of $1.4 billion. Furthermore, AEP anticipates recording an additional pre-tax loss between $180 million and $220 million in the third quarter of 2022 due to these amendments. The closing of the sale is now expected to occur in January 2023, following regulatory approval from the Federal Energy Regulatory Commission (FERC), which has a decision deadline of December 16, 2022. Investors should note this revised financial impact and the updated timeline for the divestiture.
Key Highlights
- 1AEP amended the Stock Purchase Agreement for the sale of Kentucky Power Company (KPCo) and AEP Kentucky Transmission Company, Inc. (KTCo).
- 2The enterprise value purchase price was reduced from approximately $2.85 billion to $2.646 billion.
- 3AEP now expects to receive approximately $1.2 billion in net cash proceeds, down from an estimated $1.4 billion.
- 4An additional pre-tax loss on the sale, ranging from $180 million to $220 million, is expected to be recorded in Q3 2022.
- 5The closing of the transaction is delayed and now anticipated in January 2023.
- 6A condition for closing related to the Mitchell Plant agreements has been waived upon FERC approval.
- 7FERC approval is expected by December 16, 2022, with closing following thereafter.