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Platinum Equity has signed a definitive agreement to acquire GenOn’s Hunterstown power generation facility and related assets in a transaction valued at approximately $520 million. GenOn, a unit of NRG Energy Inc., filed for bankruptcy protection in June 2017.
The acquisition is subject to regulatory approval and is expected to close in the second quarter of 2018. Located in Gettysburg, Pennsylvania, the Hunterstown facility is a combined-cycle gas turbine generating power plant that provides 810 MW to the PJM (Met-Ed) 500kV grid, with enough to supply more than 648,000 homes.
The investment offers a compelling mix of elements that correspond with Platinum Equity’s strategy, which emphasizes entry price, downside protection and operational excellence to create value.
“The power generation industry continues to experience some dislocation, which is fueling corporate carve out activity,” said Platinum Equity Partner Louis Samson. “Hunterstown is well maintained and features industry-leading technology. It operates in PJM, the largest electricity market in the United States, and generates strong recurring revenue streams.”
Mr. Samson said Platinum Equity is actively looking for add-on opportunities for the Hunterstown asset as well as additional platform investments in the power generation market.
“We believe that the dynamics prevailing in this sector will continue to create attractive opportunities for us to acquire assets and create value,” added Mr. Samson.
AOS Energy Partners provided consulting services to Platinum Equity in connection with the Hunterstown acquisition and will co-invest in the transaction. AOS is expected to remain active with the investment going forward.
Financing will be led by Morgan Stanley and Latham & Watkins is acting as legal counsel to Platinum Equity on the Hunterstown acquisition.