PPL Reaches Agreement to Sell Chilean Company
PPL Corporation (NYSE: PPL) announced Wednesday (9/12) that it has agreed to sell its controlling interest in a Chilean electricity delivery business to Compañía General de Electricidad S.A. (CGE).
CGE has agreed to acquire PPL’s 95.4 percent interest in Empresas Emel S.A. (Emel) for $660 million. The transaction is expected to close by mid-November 2007, following a public tender process for the total shares issued by Emel.
Emel, headquartered in Santiago, has 575,000 electricity delivery customers in central and northern Chile.
As a result of the sale, PPL said it expects to record a fourth-quarter special after-tax earnings gain in the range of $205 million to $225 million, or 53 to 58 cents per share, subject to final accounting and tax calculations.
“There was robust interest in the Chilean operations, interest that resulted in the process moving even more quickly than we had anticipated,” said Rick L. Klingensmith, president of PPL Global, the company’s international subsidiary. He noted that the Chilean operations have shown significant improvement in profitability, customer service, reliability and safety -- improvements that make Emel one of the top service companies in Chile.
PPL announced its intention to sell its Latin American operations in March, saying that, since it did not intend to significantly grow its interests in the region, it was acting to take advantage of attractive market valuations for solidly performing operations in the region. The company completed sales of its electricity delivery companies in El Salvador and Bolivia in May and July, respectively.
PPL Global companies continue to provide electricity delivery services to 2.5 million customers in the United Kingdom. PPL has said it has no plans to sell the U.K. businesses, which accounted for about 25 percent of PPL’s annual earnings in 2006.
The company has said that one of the options for proceeds from the Latin American sales would be to invest in growth opportunities in its core business of generating, marketing and delivering electricity. Other options include repurchase of a portion of the company’s debt and common stock.
J.P. Morgan Securities Inc. advised PPL on the sales process.
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