GSC Group to acquire Complete Energy for $1.3bn

Complete Energy owns and operates two natural gas-fired combined cycle power generation facilities: the 1,022-megawatt La Paloma generating facility, located near Bakersfield, California, and the 837-megawatt Batesville generating facility, located in Northern Mississippi. The deal values the La Paloma plant at $900m and the Batesville plant at $400m.

Under the terms of the deal, GSCAC is expected to issue approximately $440m of new equity to Complete Energy's current owners and to other holders of debt and equity of the company's subsidiaries, assume approximately $627m of net project-level debt, and retire other debt and pay transaction expenses of approximately $183m. A GSCAC subsidiary will also issue a $50m mezzanine note, according to a statement.

The terms also provide for the issuance of five million additional GSCAC shares to the current owners and stakeholders of Complete Energy and its subsidiaries if GSCAC's stock price reaches $14.50, and five million additional shares if GSCAC's stock price reaches $15.50 per share within five years. Complete Energy management will receive approximately 36 per cent of these contingent shares.

As a result of these transactions, TCW will become GSCAC's largest shareholder, with a 19 per cent ownership. GSCAC's existing shareholders are expected to collectively own approximately 42 per cent of GSCAC and the current owners of Complete Energy are expected to own approximately ten per cent, in each case on a fully-diluted basis and assuming that all of the current minority interest owners in Complete Energy's subsidiaries participate in the transaction.

As part of the deal, Complete Energy will continue to be led by co-founders Hugh Tarpley and Lori Cuervo.

Matthew Kaufman, president of GSCAC, said, 'We were impressed with the quality of the Complete Energy power generation assets and are excited about the current market dynamics in both California and the Southeast, as well as the significant opportunity that this portfolio provides for both brownfield expansion and acquisitions.'

GSC Group is headquartered in New Jersey and has offices in New York, London and Los Angeles. The firm has approximately $22bn in assets under management.

Copyright © 2008 AltAssets