Transaction is expected to close in two to four months
Negotiations to sell the remaining Latin American assets in final stages
CHARLOTTE, N.C. -- Duke Energy announced today it has reached an agreement to sell its holdings in Brazil to China Three Gorges Corporation (CTG) for approximately $1.2 billion in cash and the assumption of debt. The after-tax proceeds from the transaction are expected to be used to reduce Duke Energy holding company debt.
"We are also moving through the process of negotiating a sale of our remaining assets in Central and South America with the expectation of an additional announcement to follow," Good added.
The company began the process of exiting its International Energy business segment in February 2016. Duke Energy International owns 4,400 megawatts (MW) of power generation facilities and engages in sales and marketing of electric power, natural gas and natural gas liquids in Central and South America.
CTG is a clean energy group focused on large-scale hydropower development and operation. CTG is also engaged in renewable energy businesses including wind and solar power. Present in 40 countries, CTG is the world´s largest producer of hydroelectric power with an installed capacity of about 100 gigawatts, both under operation and construction.
The completion of the transaction is conditioned on approvals in Brazil from the National Agency of Electrical Energy (Agência Nacional de Energia Elétrica) and the Brazilian Antitrust Agency (Conselho Administrativo de Defesa Economica) and the required approvals by Chinese authorities and other conditions precedent. Closing is expected to occur in two to four months.
Duke Energy Brazil owns 2,090 megawatts of power generation facilities. It has eight hydroelectric plants with 2,057 megawatts of capacity located on the border between the states of Sao Paulo and Parana and owns two small hydroelectric plants, each with a capacity of 16.5 megawatts, located on the Sapucai Mirim River in northern Sao Paulo State.
For a map and brief description of Duke Energy International's operations and power plant locations, see https://www.duke-energy.com/about-us/businesses/international.asp
Duke Energy's financial advisors are Credit Suisse and J.P. Morgan. Skadden, Arps, Slate, Meagher & Flom LLP is the company's legal advisor.
This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management's beliefs and assumptions and can often be identified by terms and phrases that include "anticipate," "believe," "intend," "estimate," "expect," "continue," "should," "could," "may," "plan," "project," "predict," "will," "potential," "forecast," "target," "guidance," "outlook" or other similar terminology. Various factors may cause actual results to be materially different than the suggested outcomes within forward-looking statements; accordingly, there is no assurance that such results will be realized. These factors include, but are not limited to: state, federal and foreign legislative and regulatory initiatives, including costs of compliance with existing and future environmental requirements or climate change, as well as rulings that affect cost and investment recovery or have an impact on rate structures or market prices; the extent and timing of costs and liabilities to comply with federal and state regulations related to coal ash, including amounts for the required closure of certain ash basins, are uncertain and difficult to estimate; the ability to recover eligible costs, including amounts associated with coal ash basin asset retirement obligations and future significant weather events, and earn an adequate return on investment through the regulatory process; the costs of decommissioning Crystal River Unit 3 and other nuclear facilities could prove to be more extensive than amounts estimated and all costs may not be fully recoverable through the regulatory process; credit ratings of the company or its subsidiaries may be different from what is expected; costs and effects of legal and administrative proceedings, settlements, investigations and claims; industrial, commercial and residential growth or decline in service territories or customer bases resulting from variations in customer usage patterns, including energy efficiency efforts and use of alternative energy sources, including self-generation and distributed generation technologies; advancements in technology; additional competition in electric markets and continued industry consolidation; political, economic and regulatory uncertainty in Brazil and other countries in which Duke Energy conducts business; the influence of weather and other natural phenomena on operations, including the economic, operational and other effects of severe storms, hurricanes, droughts, earthquakes and tornadoes; the ability to successfully operate electric generating facilities and deliver electricity to customers including direct or indirect effects to the company resulting from an incident that affects the U.S. electric grid or generating resources; the impact on facilities and business from a terrorist attack, cybersecurity threats, data security breaches, and other catastrophic events such as fires, explosions, pandemic health events or other similar occurrences; the inherent risks associated with the operation and potential construction of nuclear facilities, including environmental, health, safety, regulatory and financial risks; the timing and extent of changes in commodity prices, interest rates and foreign currency exchange rates and the ability to recover such costs through the regulatory process, where appropriate, and their impact on liquidity positions and the value of underlying assets; the results of financing efforts, including the ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings, interest rate fluctuations and general economic conditions; declines in the market prices of equity and fixed income securities and resultant cash funding requirements for defined benefit pension plans, other post-retirement benefit plans, and nuclear decommissioning trust funds; construction and development risks associated with the completion of Duke Energy and its subsidiaries' capital investment projects, including risks related to financing, obtaining and complying with terms of permits, meeting construction budgets and schedules, and satisfying operating and environmental performance standards, as well as the ability to recover costs from customers in a timely manner or at all; changes in rules for regional transmission organizations, including changes in rate designs and new and evolving capacity markets, and risks related to obligations created by the default of other participants; the ability to control operation and maintenance costs; the level of creditworthiness of counterparties to transactions; employee workforce factors, including the potential inability to attract and retain key personnel; the ability of subsidiaries to pay dividends or distributions to Duke Energy Corporation holding company (the Parent); the performance of projects undertaken by our nonregulated businesses and the success of efforts to invest in and develop new opportunities; the effect of accounting pronouncements issued periodically by accounting standard-setting bodies; the impact of potential goodwill impairments; the ability to successfully complete future merger, acquisition or divestiture plans; the ability to successfully integrate the businesses of and realize anticipated benefits related to the acquisition of Piedmont Natural Gas Company, Inc. (Piedmont) and the risk that the credit ratings of the combined company or its subsidiaries may be different from what the companies expect; the likelihood of completion and expected timing of the transaction with China Three Gorges Corporation, including the timing, receipt and terms and conditions of the required governmental and regulatory approvals of the proposed transaction that could reduce anticipated benefits or cause the parties to abandon the transaction; and the likelihood, terms and timing of the potential sale of Duke Energy's remaining assets in Central and South America could change the presentation of certain assets, liabilities and results of operations as assets held for sale, liabilities associated with assets held for sale, and discontinued operations, respectively.
Additional risks and uncertainties are identified and discussed in Duke Energy's and its subsidiaries' reports filed with the SEC and available at the SEC's website at www.sec.gov. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than described. Forward-looking statements speak only as of the date they are made; Duke Energy expressly disclaims an obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Duke Energy, one of the largest electric power holding companies in the United States, supplies and delivers electricity to approximately 7.4 million customers in the Southeast and Midwest, representing a population of approximately 24 million people. The company also distributes natural gas to more than 1.5 million customers in the Carolinas, Ohio, Kentucky and Tennessee. Its commercial and international businesses operate diverse power generation assets in North America and Latin America, including a growing renewable energy portfolio.
Headquartered in Charlotte, N.C., Duke Energy is an S&P 100 Stock Index company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available at duke-energy.com.
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