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PSEG Global to Explore Sale of SAESA Group of Chilean Electric Distribution Companies


PSEG Global announced today it intends to sell its ownership interests in the SAESA Group of companies (SAESA) in southern Chile. The SAESA Group companies (subsidiaries of PSEG Global) are major electric distribution and transmission businesses with 638,000 customers and a total of 118 MWs of wind, hydro, diesel and gas electric generation capacity. PSEG also announced that it has engaged Credit Suisse to act as an advisor to PSEG in the sale of SAESA.

SAESA is Chile’s second largest electric distribution company in terms of geographical coverage with a total franchise area 390,000 square kilometers. The SAESA group serves 26 percent of Chile’s population, providing electric service to more than 2.6 million inhabitants.

The principal companies that make up the SAESA Group include:

• SAESA (Sociedad Austral de Electricidad S.A.), an electric distribution company in Chile’s IX and X Regions, serving 310,000 customers;

• Frontel (Empressa Electrica de las Frontera S.A.), an electric distribution company operating in Chile’s VIII and IX Regions, serving 276,000 customers;

• Edelaysen (Empressa Electrica de Aisen S.A.), a vertically integrated generation (41MW), transmission and distribution company operating in Chile’s XI Region, serving 35,000 customers;

• STS, a transmission company that owns, operates and maintains 949 kilometers of transmission lines in Chile’s VII, IX and X Region;

• Luz Osorno, an electric distribution company in Chile’s X Region with 17,000 customers; and

• PSEG Generacion, an electric generation company with approximately 70 MWs of diesel and natural gas powered capacity.

“The SAESA Group of companies has grown rapidly and we are pleased with the dramatic improvement in operations over the last two years in particular. These are very good companies in high growth areas. The market today is providing attractive valuations for quality Latin American electric distribution companies,” said Matthew McGrath, president PSEG Global.

SAESA’s results for all of 2007 (approximately $0.19 per share) will be reported in Discontinued Operations. Despite this loss of earnings, strong performance from the balance of its portfolio could allow PSEG’s operating earnings for 2007 to fall in the middle of the company’s 2007 guidance of $5.15 to $5.45 per share. PSEG is also reiterating its 2008 guidance for operating earnings of $5.60 - $6.10 per share. On a full year basis, the sale of SAESA could result in dilution of $0.07-$0.08 per share. The impact on 2008, however, should be greater than this amount given that the net sale proceeds will only be available for a portion of the year.

PSEG Energy Holdings, in conjunction with the recent closing of other asset sales in Latin America, plans to use some of its cash on hand to call $200 million of PSEG Energy Holdings’ 10% Senior Notes due 10/1/09. The call will be in compliance with the terms of the bond indenture with final pricing established 3 days prior to expiration of the 30 day call notice period. Thomas O’Flynn, president, PSEG Energy Holdings and executive vice president and CFO, PSEG said that, “the redemption is in keeping with the long-term financial goals of Energy Holdings; the sale of assets provides cash for dividend distribution to the parent company to further enhance its strong financial position, allows for a balanced reduction in debt at the subsidiary level and further increases our ability to pursue growth opportunities in our core U.S. markets.”

PSEG Global’s primary investments include 100 percent ownership in two 1,000-mw electric generation plants in Texas, and partial ownership of a number of smaller plants in California, Hawaii and New Hampshire. PSEG Global also has small investments in electric generation plants in Italy, India and Venezuela.

PSEG Global is a subsidiary of PSEG Energy Holdings and an indirect subsidiary of PSEG (NYSE: PEG). PSEG is a diversified energy company based in Newark, New Jersey. Its other main subsidiaries include PSEG Power, a merchant generation company and PSE&G, an electric and gas distribution company in New Jersey.


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