US$1.5 billion acquisition to create second largest solar portfolio in North America

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US$1.5 billion acquisition to create second largest solar portfolio in North America

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Consolidated Edison, Inc. (more commonly known as Con Edison) has announced that one of its subsidiaries has agreed to acquire 981 MW AC of operating renewable energy generation projects from a subsidiary of Sempra Energy. The purchase price is US$1.54 billion (subject to closing adjustments, including working capital).

The acquisition includes non-utility operating solar assets and one wind facility, as well as certain development rights for additional solar and energy storage projects. It is expected to be completed near the end of 2018.

Following completion, Con Edison expects to be the second largest owner of solar electric production projects in North America.

The acquisition will increase Con Edison’s utility-scale, renewable energy production portfolio to approximately 2,600 MW AC, of which 85% is solar and 15% is wind. The energy produced will avoid approximately 5.4 million metric tons of carbon dioxide emissions annually, which is the equivalent of taking 1.2 million vehicles off the roads.

The 981 MW being acquired include a 379 MW AC share of projects already partially owned by Con Edison subsidiaries.

The projects are located in Nevada, Arizona, California, and Nebraska. All sell electricity under long-term agreements with investment-grade utilities or municipalities. Together, they have US$576 million of existing project debt.

Con Edison expects to finance the purchase price for the acquisition with a combination of US$715 million equity and US$825 million long-term, non-recourse debt. The company has not disclosed any lenders.

The sale is part of a multi-phase, portfolio-optimization initiative announced by Sempra Energy in June this year. In addition to the assets included in this sale, the company intends to sell the rest of its non-utility U.S. wind and certain U.S. midstream natural gas assets.

The acquisition is subject to customary closing conditions and consents, including approvals by the Federal Energy Regulatory Commission and the U.S. Department of Energy, and the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.

Citi served as lead financial advisor to Con Edison and has also provided committed bridge financing to support the acquisition. CCA Group, LLC also acted as a financial advisor. Troutman Sanders LLP served as Con Edison’s legal advisor. Credit Suisse, J.P. Morgan and Lazard are serving as financial advisors to Sempra Energy and Latham & Watkins LLP is serving as legal advisor.

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