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Officials say agreements with area landowners
will not change
BY
KATE HESSLING
Tribune Staff Writer
AND THE ASSOCIATED
PRESS
UPPER THUMB
— Following Tuesday’s announcement that Deere & Company will
sell its wind business to a subsidiary of nuclear plant powerhouse
Exelon Corp., officials said the sale will not negatively impact
existing agreements with landowners participating in the two existing
area wind developments.
“All the owners of the wind energy project owned
by Deere are being notified as we speak,”
Ken
Golden, Deere & Company Strategic Public Relations director, told
the Tribune early Tuesday afternoon. “There’s always a transition in
the business, but they will be transitioned from Deere to Exelon as we
progress toward finalizing the purchase agreement.”
Deere & Company announced Tuesday it has signed
a definitive agreement to sell
John
Deere Renewables, LLC for $900 million to Exelon Generation Company,
LLC, a wholly-owned subsidiary of Exelon Corporation, which is the
nation’s largest operator of nuclear power plants.
According to a release Deere & Company gave the
Tribune, the definitive agreement announced Tuesday includes the
completed projects plus numerous others in development by
John
Deere Renewables.
Regarding the existing leases between
John
Deere and landowners participating in Michigan Wind I near Ubly and
Harvest Wind Farm in Elkton, Golden said, “When a company buys a
business, they buy the current agreements that (the other) company has
— so the agreements as written with Deere are agreements with whoever
buys the company. So Exelon would have those agreements in place as
well.”
Deere announced in February it was reviewing
options for
John
Deere Renewables. On Tuesday, the company said the deal will allow it to
get back to what it does best, which is manufacturing equipment.
“As Deere sharpens its own strategic focus, we
have concluded that the company’s resources are best invested in
growing our core equipment businesses around the world,” stated Samuel
R. Allen, Deere & Company chairman and chief executive officer, in
Tuesday’s release. “We have chosen to place the wind portfolio with
Exelon in part due to its demonstrated leadership in the energy
industry.”
The Associated Press reported Tuesday’s
announcement, however, could potentially signal an active merger and
acquisition period ahead for the power industry. With energy prices
persistently low due to a grinding economic recovery, stakes in the
power industry have begun to shift.
Earlier this month, Blackstone Group paid $542.7
million to take
Houston
’s Dynergy Inc. private. In a three-way deal, Dynergy also sold four
power plants to NRG Energy Inc. for $1.36 billion in cash.
But Golden told the Tribune the impetus behind
Deere’s decision to sell its wind energy business is not a lack of
confidence in the wind energy industry, in which Deere has invested $1
billion over the past five years in the financing, development and
ownership of wind energy projects.
“It’s really for us to become more
strategically focused on our equipment businesses,” Golden told the
Tribune. “We have expressed confidence in the wind energy industry —
we have expressed confidence in it in the past and we continue to
express confidence in it, but it’s not a good industry for
John
Deere to be involved in.”
The wind business is pretty new to Exelon, though
the company has been a wholesale marketer of wind energy in
Illinois
,
Pennsylvania
and
West Virginia
.
However, Exelon is not new to the renewable energy,
as it already has more than 1,000 megawatts of owned and contracted
renewable power, including hydroelectricity, wind, landfill gas and
solar. Exelon Power also owns and operates a 10-megawatt solar plant in
Chicago
, the largest urban solar plant in the country.
The Deere business brings with it a physical
infrastructure that includes 36 completed projects in eight states with
an operational capacity of 735 megawatts. The projects, which will be
operated by subsidiary Exelon Generation Co., could power nearly 184,000
homes, according to Energy Department figures.
“Not only does this acquisition add value for
Exelon shareholders, providing incremental earnings in 2012 and cash
flows in 2013, but it also is one more way to implement a clean energy
future,” stated
John
W. Rowe, Exelon chairman and CEO, in a release given to the Tribune
Tuesday. “Whether harmful emissions are priced or regulated, our
combined capacity of nearly 19,000 megawatts of zero-emission wind,
solar, hydro, landfill gas and nuclear power remains a clear competitive
advantage that will only become more valuable.” The deal comes during
a challenging time for the wind power industry in particular, according
to Associated Press reported. Government stimulus money that helped
expand capacity last year is running out. While many states have adopted
standards requiring a certain amount of energy come from renewable
sources, Congress has yet to enact a nationwide standard.
Wind advocates say that is why wind has not reached
its potential.
Exelon, however, is positioned to ride out the
economic downturn and potentially capitalize on alternative energy
assets in the future, the Associated Press reported.
“We expect to see increasing demand for clean,
efficient wind power at a national level and in the 29 states that
already have a renewable energy standard,” Rowe stated in Tuesday’s
release. “This acquisition gives Exelon a strong position in the wind
generation business that adds diversity to our generation fleet and
provides more options for future growth.”
Exelon reported profits of $2.7 billion last year.
The company expects the acquisition to add to earnings in 2012 and to
cash flows in 2013. It is funding the deal with Exelon Generation debt.
Deere said it will record a $25 million after-tax charge in the
fourth-quarter. The sale was not reflected in the company’s $375
million fourthquarter earnings estimate from earlier this month.
The initial acquisition is valued at $860 million.
Deere will receive the remaining $40 million when construction begins on
projects that already are planned.
The transaction is expected to close by the end of
the year.
Kate Hessling
• (989)
269-6461 • khessling@hearstnp.com
Web
Link>> http://www.michigansthumb.com/articles/2010/09/01/news/local_news/doc4c7e3c0369bf8832057007.txt
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