Creditors hire banks to sell power plants-sources


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Two creditor groups controlling the fate of a handful of Teco Energy Inc. and Exelon Corp. power plants recently hired investment bankers to pursue a sale of the assets, sources familiar with the situation said recently.

Lazard was retained to advise EBG Holdings, a private entity owned by the company's lenders, on the sale of several Massachusetts plants, which it took over from Chicago-based Exelon in May, the sources said.

Final bids for the unregulated plants, which made up Exelon's Boston Generating subsidiary before the company turned its ownership over after a loan default, are expected in October, one source said. The creditor group is led by BNP-Paribas.

Energy bankers estimated the sale could bring bids of at least $1.3 billion.

The plants have more than 3000 megawatts in generating capacity, enough to power more than 3 million homes. Exelon borrowed $1.1 billion to build the newest plants, Mystic 8 and 9 and Fore River, before ceding its $700 million stake to the banks.

A spokesman for Lazard declined to comment. An Exelon spokeswoman also declined to comment.

The Lazard hiring was first reported in the Institutional Investor publication, Power Finance and Risk.

In addition, Goldman Sachs Group Inc. has been tapped by a creditor group that will soon take control of Teco's Gila River power plant in Gila Bend, Arizona, and its Union power plant project in El Dorado, Arkansas, sources said.

Teco, based in Tampa, Florida, said in February it would turn over ownership of the plants, which have more than 4,400 megawatts of generating capacity, to bank lenders led by Citigroup and Societe Generale. It recently said it expects final approvals in November and can then close the transfer.

The auction could generate bids of up to $1 billion, one energy banker estimated.

The sale is part of Teco's plan to focus on its regulated plants in Florida following the collapse of Enron Corp. and the merchant sector, which sells electricity to the wholesale market. It plans a write-down of more than $700 million on the plants, which cost more than $2 billion to build.

A spokesman for Goldman Sachs declined to comment and a Teco spokeswoman and a spokesman for Citigroup were not immediately available for comment.

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