Regulated electric and natural gas utility company Integrys Energy Group, Inc. (TEG) said Monday that its non-regulated subsidiary, Integrys Energy Services, Inc., has agreed to sell substantially all of its wholesale electric marketing and trading business to Macquarie Cook Power, Inc., a subsidiary of Macquarie Group Ltd.(MQBKY.PK, MQG.AX), as the company plans to reduce the size and scope of its operations. The company has not disclosed the financial details of the transaction.
Chicago, Illinois-based Integrys Energy said the transaction consists of various power transactions, which include physical forwards, financial derivatives, capacity and transmission rights, with an annual average total gross volume in excess of 125 million megawatt-hours or Mwh, over the past 3 years. According to Integrys Energy, the deal will be closed in two steps. During the first quarter of 2010, the company expects to transfer substantially all of the market risk associated with the transaction to Macquarie by entering into trades with Macquarie Bank Ltd., that mirror Energy Services' underlying commodity contracts. By the end of the second quarter, the company anticipates to transfer title to the underlying commodity contracts and close the deal with Macquarie, at which time the mirror transactions will terminate.
Integrys Energy said that it expects the transaction to reduce collateral support requirements by about $400 million.
Further, Integrys added that the transaction requires approval from Federal Energy Regulatory Commission. However, the company noted that the deal does not include or directly affect the retail electric or natural gas marketing business operated by Energy Services. Charles Schrock, president and chief executive officer of Integrys Energy Group said, "This transaction brings us another step closer to achieving the ultimate goals of the strategy that we set forth earlier this year, which is to reduce our capital investment and collateral support requirements for Integrys Energy Services." Macquarie Group provides banking, financial, advisory, investment and funds management services. Integrys Energy Group said that J.P. Morgan Securities acted as its exclusive financial advisor and Thorndike Landing acted as lead advisor to Integrys Energy Services.
TEG closed on December 24 at $42.47 on the NYSE, while MQBKY.PK ended on Dec. 23 at $41.73 on the OTC.
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