FirstEnergy to Sell Additional Stake in Transmission Business to Brookfield for $3.5 Billion
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U.S.-based electric utility FirstEnergy has agreed to divest an additional 30 percent stake in its FirstEnergy Transmission business to Brookfield Super-Core Infrastructure Partners in an all-cash deal worth $3.5 billion.
FirstEnergy Transmission serves as the holding company for three of the electric utility’s Federal Energy Regulatory Commission (FERC)-regulated transmission utility subsidiaries.
The subsidiaries include Mid-Atlantic Interstate Transmission (MAIT), American Transmission Systems (ATSI), and Trans-Allegheny Interstate Line (TrAILCo).
The latest deal follows FirstEnergy’s previous divestiture of a 19.9 percent stake in the transmission business to Brookfield Super-Core Infrastructure Partners for around $2.4 billion in May 2022.
Following the closing of the transaction, FirstEnergy will maintain its majority ownership in the transmission business and the unit will be continued to be managed by the company’s workforce.
The American electric utility will maintain about 70 percent of its overall regulated transmission portfolio.
With the proceeds from the transaction, FirstEnergy expects to bolster its financial position and expedite enhancements in its credit profile as it aims for a funds-from-operations to debt ratio of 14-15 percent.
FirstEnergy said that in comparison to year-end 2021, the holding company debt was reduced in 2022 by $2.5 billion, which is more than 30 percent.
The company has raised its 2021-2025 long-term growth plan to about $18 billion, which is an increase of nearly $1 billion compared to the $17 billion target set in 2021.
“We are pleased to expand our partnership with Brookfield, one of the world’s largest and most respected infrastructure investors. This agreement efficiently raises capital at an attractive valuation and speaks to the strength and potential of our regulated growth strategies,” said FirstEnergy Board Chair, Interim President, and CEO John Somerhalder.
“It positions FirstEnergy to drive value for shareholders as we further optimize our financial position and plan for additional smart grid and clean energy investments in our regulated transmission and distribution businesses,” added Somerhalder.
The transaction, which is subject to regulatory approvals and clearances and other customary conditions, is anticipated to close by early 2024.
Source: NS Energy
About FirstEnergy
FirstEnergy is dedicated to integrity, safety, reliability, and operational excellence. Its ten electric distribution companies form one of the nation’s largest investor-owned electric systems, serving customers in Ohio, Pennsylvania, New Jersey, West Virginia, Maryland, and New York. The company’s transmission subsidiaries operate approximately 24,000 miles of transmission lines that connect the Midwest and Mid-Atlantic regions.
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