8-KMaterial Agreements

EXELON CORP 8-K Report, Material Agreement (Nov 2, 2004)

Filed November 2, 2004For Securities:EXC

Summary

Exelon Corporation, through its subsidiary Exelon Generation Company, LLC, has entered into a definitive agreement to sell its interest in Sithe Energies, Inc. to Dynegy Inc. for $135 million in cash. This transaction follows Exelon Generation's earlier exercise of a call option to acquire the remaining 50% interest in Sithe for $97 million, with the stated intent to divest its entire stake. This strategic move is expected to remove approximately $836 million of debt associated with the Independence plant from Exelon's balance sheet. While the company anticipates receiving about $60 million in cash distributions from Sithe prior to the closing of the sale to Dynegy, Exelon projects that this divestiture will not have a material impact on its future earnings. The sale is subject to regulatory approvals, with an anticipated closing in early first quarter 2005.

Key Highlights

  • 1Exelon Generation to sell 100% interest in Sithe Energies to Dynegy Inc. for $135 million cash.
  • 2Transaction follows prior acquisition of remaining 50% interest in Sithe for $97 million.
  • 3Sale will deconsolidate approximately $836 million of debt related to the Independence plant.
  • 4Exelon expects to receive ~$60 million in cash distributions from Sithe before the sale closes.
  • 5The divestiture is not expected to materially impact Exelon's future earnings.
  • 6Sale excludes Sithe International Inc., which has been retained and sold to a Generation subsidiary.
  • 7Transaction is subject to regulatory approvals, with closing expected in early Q1 2005.

Frequently Asked Questions

Exelon will receive $135 million in cash from Dynegy for Sithe, and expects an additional $60 million in cash distributions prior to closing. This divestiture will remove approximately $836 million of debt from Exelon's balance sheet. The net impact on future earnings is expected to be immaterial.

The sale to Dynegy includes Sithe's remaining operating assets, totaling approximately 1,350 MWs, which includes the 1,020 MWs Independence plant. Sithe International Inc., which holds interests in Mexican projects, is excluded from this sale and has been retained by Exelon Generation.

The sale of Sithe to Dynegy is subject to federal and state regulatory approvals. The parties anticipate closing the transaction in early the first quarter of 2005.

The filing indicates that Exelon Generation exercised a call option to acquire the remaining 50% interest in Sithe with the intent to fully divest its interest. This strategic move aims to simplify its balance sheet by removing significant debt associated with the Independence plant.