HOUSTON (AP) — Power producer Dynegy is buying five coal power plants from utility Ameren to increase its power generation capabilities in Illinois.
Dynegy won't pay any cash for the plants and the related Ameren business that provides electricity to homes and businesses, but is assuming $825 million in Ameren's debt. Ameren said the value of its benefits from the deal also include tax gains and total about $900 million.
Ameren is buying three gas plants that are also in the subsidiary that it's selling to Dynegy for $133 million, meaning Dynegy will wind up with the cash. St. Louis-based Ameren still wants to sell the plants.
Dynegy, a Houston company that emerged from bankruptcy protection in October, said buying the Ameren plants will give it more than 8,000 megawatts of generating capacity in Illinois and nearly 14,000 megawatts in the U.S.
Ameren said the sale will allow it to focus exclusively on its rate-regulated electric, natural gas and power transmission operations. The deal also strengthens its balance sheet, and Ameren said it makes its business less risky.
Many power producers are shifting away from coal-fired plants toward those powered by natural gas, which is has been cheaper and more environmentally friendly than coal. Ameren said in a December regulatory filing that it hoped to sell off its coal-fired plants, citing shrinking profits over the past few years because of weaker power prices and costs related to environmental regulations.
The companies expect the acquisition to close in the fourth quarter.
Also on Thursday, Dynegy said its fourth-quarter loss narrowed to $107 million from $616 million in the same quarter a year ago. Revenue grew to $312 million from $130 million.
Ameren shares added 19 cents to $34.19 in afternoon trading, while Dynegy rose by $1.19, or 5.9 percent, to $21.37.