The deal involves FirstEnergy’s FirstEnergy Transmission unit, which serves as the holding company for three of the electric utility's FERC-regulated transmission utility subsidiaries, which include the Mid-Atlantic Interstate Transmission, American Transmission Systems, and Trans-Allegheny Interstate Line
Brookfield Super-Core Infrastructure Partners to acquire an additional 30% stake in FirstEnergy Transmission for $3.5bn. (Credit: Tapani Hellman from Pixabay)
US-based electric utility FirstEnergy has agreed to divest an additional 30% stake in its FirstEnergy Transmission business to Brookfield Super-Core Infrastructure Partners in an all-cash deal worth $3.5bn.
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% stake in the transmission business to Brookfield Super-Core Infrastructure Partners for around $2.4bn 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% 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%.
FirstEnergy said that in comparison to year-end 2021, the holding company debt was reduced in 2022 by $2.5bn, which is more than 30%.
Besides, the company has raised its 2021-2025 long-term growth plan to about $18bn, which is an increase of nearly $1bn compared to the $17bn target set in 2021.
FirstEnergy board chair, interim president, and CEO John Somerhalder said: “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.
“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.”
The transaction, which is subject to regulatory approvals and clearances and other customary conditions, is anticipated to close by early 2024.