French gas and power utility Engie has signed agreements to divest its interests in 13GW of power generation capacity.
The firm signed an agreement with a joint venture of Dynegy and private equity firm Energy Capital Partners to sell its 8,731MW of US power plants for $3.3bn.
The power plants are located in ERCOT, PJM, ISO-New England and other regulated power markets. Dynegy with have 65% stake in the joint venture, known as Atlas Power, while the remaining stake is held by Energy Capital.
Dynegy will be responsible for day-to-day management and operation of the portfolio.
Energy Capital partner Tyler Reeder said: "The joint venture will benefit tremendously from Dynegy’s strong operating capabilities, commercial risk management, and focus on environmental compliance and safety."
Scheduled to be completed in the fourth quarter 2016, the transaction is subject to customary closing conditions including approval from the Federal Energy Regulatory Commission, Public Utility Commission of Texas, and expiration of Hart-Scott-Rodino waiting periods.
Dynegy expects the joint venture to further diversify its footprint and creates a combined 35,000MW portfolio.
Proceeds from the transaction will be used by Dynegy to partially fund upfront equity commitment to the joint venture.
Additionally, Engie agreed to divest 1.2GW of pumped-storage hydro assets and 0.2GW of conventional hydro assets located in Massachusetts and Connecticut, to Public Sector Pension Investment Board of Canada for $1.2bn.
The divestment is a part of the company’s strategy to redesign and simplify its portfolio.
As part of this effort, Engie also agreed to acquire OpTerra in energy services in a bid to offer new and differentiated energy services in the US.
PSP Investments private investments global head senior vice-president Guthrie Stewart said: "The purchased assets are an excellent fit with PSP Investments’ long -term investment horizon and its strategy to leverage industry – specialized platforms, such as H2O Power."
Additionally, Engie signed agreement to sell its interests in two coal-fired power plants, Paiton and Meenakshi, located in Indonesia and India.
The two power plants, which have a combined generation capacity 3GW, are expected to hep the firm reduce its debt by €1.4bn while entire disposal of assets will help in reducing debt €5.5bn.