Parties Reach an Agreement in the 'Unwind' Transaction
LOUISVILLE, Ky. — Yesterday, at the Kentucky Public Service Commission, E.ON U.S., Big Rivers Electric Corporation, Southwire Company, Henderson Municipal Power and Light, Century Aluminum of Kentucky and Rio Tinto Alcan, reached agreements that will allow the "unwind transaction" to proceed to closing, returning the maintenance and operation of four electric generating assets in western Kentucky from E.ON U.S.'s subsidiary, Western Kentucky Energy, to Big Rivers.
"We are very pleased that all parties have reached agreement," said Paul W. Thompson, E.ON U.S. senior vice president of Energy Services. "Just a few short weeks ago this transaction was all but dead, but the parties came together and worked diligently to get it back on track and moving toward a successful closing very soon."
On May 29, Century Aluminum announced that due to the economic downturn in the aluminum market that they could no longer move forward with the "unwind." Since that time, the parties have continued to negotiate and, as a result, E.ON U.S. has established some conditional backstops for Century that will reduce a significant portion of the financial risks of its power contracts in the event that short-term production curtailments are required.
"This is a significant milestone and we are appreciative of the parties' willingness to return to the table to hammer out agreements that allows this transaction again to move forward," said Mark Bailey, President and CEO of Big Rivers.
"We are delighted to be able to participate in the unwind agreement," said Century vice president and Hawesville plant manager Matt Powell. "All of the parties have worked tirelessly to achieve a mutually beneficial outcome. Although we still face significant issues in the near-term as a result of depressed aluminum prices, the unwind agreement is a major step forward for the long-term viability of the smelters and for the economic health of the local communities here in western Kentucky."
"This transaction is important not only for the future of the Sebree smelter, but also for the economic vitality of Western Kentucky," said Stephane Leblanc, Rio Tinto Sebree Plant Manager. "It will provide a new, long-term power agreement for us and help to preserve jobs in the region."
"The City of Henderson is pleased to have been in a position to help facilitate the recent resolution of the unwind transaction," said Gary Quick of Henderson Municipal Power and Light. Quick went on to say, "Protecting jobs in western Kentucky was always one of the primary objectives of the City during the negotiations."
All the agreements are expected to be filed with the Commission by June 24 for final review by the KPSC and the Attorney General and, with no major hurdles remaining, the parties are aiming for a July 8 closing.
E.ON U.S. LLC, headquartered in Louisville, Ky., is a subsidiary of E.ON A.G., the world's largest investor-owned energy services provider. E.ON U.S. is a diversified energy services company that owns and operates Louisville Gas and Electric Company, a regulated utility that serves 314,000 natural gas and 389,000 electric customers in Louisville and 16 surrounding counties, and Kentucky Utilities Company, a regulated electric utility in Lexington, Ky., that serves 538,000 customers in 77 Kentucky counties and five counties in Virginia.