Vistra closes Cogentrix purchase and adds 5,500 MW of gas power
The buyer paid part of the price in 5 million of its own shares at an agreed $185 each, and expects to repay the debt it took on from Cogentrix on or about November 5.
Chart: VST, one-minute prices, three sessions
Vistra closed its purchase of Cogentrix Energy on October 30, taking over 10 natural gas power plants with about 5,500 MW of capacity from funds managed by Quantum Capital Group. The plants sit across the PJM, ISO New England and ERCOT power markets.
Vistra paid about $2.2bn in cash, net of adjustments including the assumption of about $1.7bn of Cogentrix's outstanding debt. It also issued 5 million shares of its common stock to the seller at an agreed value of $185 per share.
The location of the plants is what matters. On Tuesday Talen Energy flagged that capacity prices in PJM are clearing at the auction ceiling amid a reliability shortfall. Vistra now holds more gas plants in a market where supply is short. How they earn their keep there, under a pricing system that remains under scrutiny, is what investors will weigh, as they already do with Talen's forward guidance.
Vistra says it expects to repay in full the term loans and revolving loans it assumed on or about November 5. That suggests it wants to shed Cogentrix's debt quickly rather than carry it.
© Raydn · raydn.us