The transaction, which will require approval from the Federal Energy Regulatory Commission, does not include or directly affect the retail electric or natural gas marketing business operated by Integrys Energy Services.
The transaction encompasses various power transactions, including physical forwards, financial derivatives, capacity and transmission rights. This portfolio of transactions had an annual average total gross volume in excess of 125 million MWh over the past three years.
The transaction will close in two steps. In the first quarter of 2010, Integrys Energy Services expects to transfer substantially all of the market risk associated with the transaction to Macquarie by entering into trades with Macquarie Bank that mirror Integrys Energy Services’ underlying commodity contracts.
Integrys Energy Services then expects to transfer title to the underlying commodity contracts and close the deal with Macquarie Cook Power by the end of the second quarter of 2010, at which time the mirror transactions will terminate.
This transaction is expected to reduce collateral support requirements by approximately $400m. The transaction requires certain customary contractual consents and regulatory approvals.
Charles Schrock, president and CEO of Integrys Energy Group, said: “This transaction brings us another step closer to achieving the ultimate goals of the strategy that we set forth earlier this year, which is to reduce our capital investment and collateral support requirements for Integrys Energy Services. The terms of the sale of the wholesale electric marketing business are in line with our expectations for the nonregulated segment strategy.”
JP Morgan Securities acted as exclusive financial advisor to Integrys Energy Group and Thorndike Landing acted as lead advisor to Integrys Energy Services for this transaction.
