PSEG Global to Explore Sale of Two Electric Distribution Companies - Chilquinta Energia and Luz del Sur
PSEG Global announced today it is exploring a potential sale of its 50% ownership of Chilquinta Energia S.A. (Chilquinta), an electric distribution company in Chile, and its 38% ownership of Luz del Sur S.A.A., an electric distribution company in Peru. PSEG also announced that it has engaged Citi to determine interest in the asset and to act as an advisor if PSEG determines that the sale of the companies is prudent. A U.S. based energy company owns the remainder of Chilquinta and 38% of Luz del Sur. The remaining ownership of Luz del Sur is publicly traded.
“Chilquinta and Luz del Sur are solidly performing distribution companies and have been very good investments for PSEG Global. The market is increasingly recognizing the value for high quality Latin American distribution companies,” said Matthew McGrath, president PSEG Global.
“The sale of these interests would increase our ability to pursue growth opportunities in our core U.S. markets or to consider share repurchases,” said Thomas M. O’Flynn, president, PSEG Energy Holdings and executive vice president and CFO, PSEG. The transaction, if it moves forward, may be modestly dilutive to earnings largely due to taxes that will be incurred on the sale. Such dilution would not affect PSEG’s ability to meet its operating earnings guidance for 2007 of $4.90 - $5.30 per share with growth of 15 percent in 2008 to $5.60 - $6.10 per share.
Chilquinta is the fifth-largest distributor of electricity in Chile, and one of the leading energy companies in Latin America. It serves more than 569,000 customers primarily in Chile’s V Region, an area of approximately 11,500 square kilometers located just north and west of Santiago. Luz del Sur is one of the largest companies in Peru and the country’s largest electric distributor in terms of energy sales, serving approximately 800,000 customers in the rapidly growing commercial and residential areas in Lima.
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