Covanta Holding to sell interest in Philippines power plant

Covanta Holding Corporation has agreed to sell all of its interests in the Quezon coal-fired electric generation facility located in the Philippines to Electricity Generating PCL (EGCO) for a price of approximately $215 million in cash. EGCO is a current partner in the Quezon project and the transaction is expected to close in the first quarter of 2011, subject to customary approvals and closing conditions.

In June of this year, Covanta announced plans to sell its equity interests in four fossil fuel facilities in the Philippines, India and Bangladesh. Quezon is the first sale from that effort and represents a significant majority of the value of these non-core assets.

The Quezon assets being sold consist of the company’s entire interest in Covanta Philippines Operating, Inc., which provides operation and maintenance services to the facility, as well as its approximately 27 percent ownership interest in the project company, Quezon Power, Inc.

The sale is expected to generate a one-time after tax book gain of approximately $140 million at closing.

Speaking about intended uses of the proceeds, Sanjiv Khattri, Covanta’s executive vice president and chief financial officer, stated that, “Consistent with our June announcement regarding capital allocation and return of capital to shareholders, we anticipate using all of the sale proceeds that can be repatriated tax efficiently to return capital to our shareholders; we estimate this amount to be in excess of $100 million.”

Discussions with prospective buyers for the three remaining assets in India and Bangladesh continue.