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
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.