United States / Purchase and Sale on Portfolio Interests of Gas Fired Power Plants
October 19, 2010
ITOCHU Corporation (headquartered in Tokyo, Japan; Masahiro Okafuji, President & CEO; hereinafter “ITOCHU”) and Chubu Electric Power Co., Inc. (headquartered in Nagoya, Japan; Akihisa Mizuno, President & Director; hereinafter “Chubu”) entered into a purchase and sale agreement to acquire partial interests of 5 gas-fired power generation assets from Tenaska, Inc. (headquartered in Omaha, Neb.; Howard Hawks, Chairman), a U.S. IPP giant. In terms of power generation capacity, this transaction represents 1,565MW out of 4,780MW in total 5 gas fired power plants.
Tyr Energy Inc. (headquartered in Overland Park, KS; Karl Usami, President & CEO; hereinafter “Tyr”), a subsidiary wholly-owned by ITOCHU, and Chubu submitted their joint bid to Tenaska in the end of September and the purchase and sale agreement was executed on October 10, 2010. The acquisition is expected to be completed within 2010 after necessary filing and process. The acquired interests would be owned by a special purpose company to be established in the United States by and between Tyr and Chubu Electric Power Company U.S.A. (“CEPCO USA”), a subsidiary wholly-owned by Chubu, on a 50-50 basis.
Each of the five assets is now successfully operated under a long-term tolling agreement with a high credit rating off-taker and is expected to generate stable income. This investment will contribute to further expansion of the U.S. IPP business, including green field development projects, for both Tyr and Chubu.
ITOCHU intends to make additional investments in sound power generation assets in the U.S., which is the world’s largest power market and where further power demand growth is predicted. To make these acquisitions, ITOCHU will utilize Tyr’s investment and asset management skill and know-how. ITOCHU seeks its investment opportunities not only in acquisition of existing assets but also by participation in early stage development projects.
Chubu has positioned the period through FY2010 to develop its overseas energy business and secure new sources of revenues. Over the medium term, Chubu is aiming to leverage its accumulated know-how, personnel and other management resources to aggressively expand its business, looking to increase its investments to approximately 100 billion yen by FY2015. Going forward, Chubu will strive to secure steady profits, contribute to the local communities in which Chubu invests, and help protect the global environment, all while paying due attention to business efficiency and risk management.
- Independent Power Producer
- Tolling Agreement is a kind of power purchase agreement, where an off-taker is obliged to provide fuel for power generation and pay for it.