El Paso Corp. (ticker: EP, exchange: New York Stock Exchange (.N))
News Release -
El Paso Corporation Closes Sale of Cedar Brakes I and II Subsidiaries
HOUSTON, TEXAS, March 3, 2005—El Paso Corporation
(NYSE:EP) announced today that it has closed the sale of the equity interests
in its Cedar Brakes I and Cedar Brakes II subsidiaries to wholly owned subsidiaries
of Arroyo Energy Investors LP, a Houston-based affiliate of The Bear Stearns
Companies Inc. (NYSE:BSC), for cash proceeds of approximately $94 million. The
purchase price was reduced from the previously announced $106 million by equity
distributions of approximately $12 million received by El Paso in 2005.
As part of the closing, El Paso Marketing, L.P., El Paso's marketing
subsidiary, has paid Constellation Energy Commodities Group, Inc. $240 million
and transferred its obligations to supply power to the Cedar Brakes I and II
entities to Constellation.
The sale eliminates approximately $575 million of associated non-recourse debt
from El Paso's balance sheet as of December 31, 2004. The equity sale
will result in a book loss of approximately $227 million, and El Paso will also
realize an approximate $30 million loss in its trading book from the transfer
of the contracts to Constellation, both of which will be reflected in El Paso's
December 31, 2004 financial results.
This sale is part of El Paso's plan to sell its domestic power restructuring
portfolio as part of its long-range plan to reduce the company's debt,
net of cash, to approximately $15 billion by year-end 2005. To date, the company
has announced or closed approximately $4.2 billion of asset sales. In addition,
these announced or closed asset sales will eliminate approximately $1.6 billion
of associated non-recourse debt from El Paso's balance sheet.
An asset sales tracker that shows all of the announced and completed asset
sales is posted at www.elpaso.com under Investor Resources.
El Paso Corporation provides natural gas and related energy products in a safe,
efficient, dependable manner. The company owns North America's largest
natural gas pipeline system and one of North America's largest independent
natural gas producers. For more information, visit www.elpaso.com.
Editor's Note: The Cedar Brakes I and II entities supply power to Public
Service Electric and Gas Company. They were created as part of El Paso's
power restructuring business under which the company restructured above-market,
long-term power purchase agreements originally tied to certain older power plants.
El Paso is no longer engaged in restructuring power purchase contracts.
This release includes forward-looking statements and projections, made
in reliance on the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The company has made every reasonable effort to ensure that
the information and assumptions on which these statements and projections are
based are current, reasonable, and complete. However, a variety of factors could
cause actual results to differ materially from the projections, anticipated
results or other expectations expressed in this release, including, without
limitation, the ability to implement and achieve our objectives in the long-range
plan, including achieving our debt-reduction targets; our ability to close our
announced asset sales on a timely basis; the uncertainties associated with governmental
regulation; and other factors described in the company's (and its affiliates')
Securities and Exchange Commission filings. While the company makes these statements
and projections in good faith, neither the company nor its management can guarantee
that anticipated future results will be achieved. Reference must be made to
those filings for additional important factors that may affect actual results.
The company assumes no obligation to publicly update or revise any forward-looking
statements made herein or any other forward-looking statements made by the company,
whether as a result of new information, future events, or otherwise.