Summary
This 8-K filing from Southern Company (SO) primarily concerns Mississippi Power Company's (a subsidiary) acquisition of the combined cycle generating facility at Plant Daniel. This facility was previously leased by Mississippi Power. The transaction, which occurred on October 20, 2011, involved Mississippi Power purchasing the facility for approximately $85 million in cash and assuming $270 million in debt obligations maturing in 2021 with a fixed interest rate of 7.13%. This acquisition will result in the facility being reflected on the financial statements of Mississippi Power and Southern Company. Based on fair value accounting, with prevailing interest rates on the acquisition date, the assumed debt was valued at approximately $346 million. Consequently, the total reported value of the facility on the balance sheet will be approximately $431 million. This represents a shift from off-balance sheet financing to an on-balance sheet asset and associated debt for the company.
Key Highlights
- 1Mississippi Power Company acquired the Plant Daniel combined cycle generating facility.
- 2The acquisition date was October 20, 2011.
- 3The purchase price consisted of approximately $85 million in cash and the assumption of $270 million in debt.
- 4The assumed debt matures in 2021 and carries a fixed interest rate of 7.13%.
- 5The facility will now be recognized on Mississippi Power's and Southern Company's financial statements.
- 6The fair value of the assumed debt, based on October 20, 2011 interest rates, was approximately $346 million.
- 7The Plant Daniel facility will be reported on the balance sheet at an approximate value of $431 million post-acquisition.