AES signed a deal to divest the 832 MW Red Oak combined cycle gas turbine (CCGT) power plant, located in New Jersey, to Energy Capital Partners and AES Ironwood and to sell a 705 MW CCGT plant in Pennsylvania, to PPL Generation. In Spain, AES finalised the divestment of a1,199 MW CCGT plant in Cartagena to GDF Suez.
The three businesses [Red Oak, Ironwood and Cartagena] together contributed approximately $26 million of net income to AES in 2011 after adjusting for ownership interests, unrealized foreign currency losses and mark-to-market derivatives losses. With total proceeds of $463 million, the implied aggregate P/E multiple for these transactions is 17.5 times estimated 2011 earnings, AES said.
"These transactions demonstrate we are executing on our strategy of aligning our portfolio to create shareholder value," said Andrés Gluski, AES President and CEO when presenting the company's fourth-quarter results. AES posted a small loss for Q4-2010 on Monday and Glsaid it would use the proceedings from selling assets and pay down debt.
Gluski said in an investor's call AES plans to pay down at least $500 million of debt, buy back shares and sell roughly $2 billion of assets in markets like China. Going forward, AES is focussing on expanding its foothold in its core markets of Brazil, Chile and the U.S.. New projects underway in Turkey, the Philippines and India.