Place to Buy or Sell your Businesses Online...

By Sam Kennedy Of The Morning Call
September 13, 2007
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PPL Corp. announced Wednesday that it has found a buyer for its Chilean electricity delivery business, a move that will bring to an end the Allentown energy company's decade-long venture into South America.Compañía General de Electricidad S.A., itself a Chilean company, will pay $660 million for PPL's 95 percent interest in Empresas Emel S.A., PPL said. The transaction is expected to close by mid-November.The delivery business, better known as Emel, is headquartered in Santiago, the capital of Chile, and has 575,000 customers in the central and northern parts of the country.
PPL expects to record a fourth-quarter after-tax gain in the range of $205 million to $225 million, or 53 to 58 cents per share, on the sale.''There was robust interest in the Chilean operations, interest that resulted in the process moving even more quickly than we had anticipated,'' PPL Global President Rick Klingensmith said in a press release.PPL paid a total of $350 million for its 95 percent interest in Emel during a three-year period starting in 1997.The sale of Emel is part of a major restructuring that has defined the early tenure of PPL Chief Executive James Miller, who last year replaced the company's longtime CEO William Hecht. Miller and other PPL officials have said they want to sharpen the company's strategic focus on its core businesses of energy supply and delivery.PPL put its Latin American operations, which also included businesses in El Salvador and Bolivia, on the auction block in March. The company said it wanted to take advantage of ''attractive market valuations'' in the region.That was followed this summer with the sale of PPL Telcom, an Allentown subsidiary that charges businesses and institutions to use its fiber-optic network, and with plans to sell natural gas distribution business PPL Gas Utilities Corp. and propane business Penn Fuel Propane, both of which are also based in Allentown.Buyers for the Latin American properties quickly emerged. The El Salvadoran business was sold in May, and the Bolivian business in July.PPL's pull-out from Latin America is in synch with the actions of other American energy companies that had rushed into the global market in the 1990s, said Paul Patterson, an analyst at Glenrock Associates in New York City.''I think people did find it to be riskier … and more difficult than they expected,'' he said of owning foreign electricity businesses.PPL was no exception. In 2002, PPL walked away from its majority stake in Brazil's CEMAR utility, which two years earlier it had purchased for $289 million. That decision was precipitated by the refusal of regulators to allow a rate hike after a drought triggered a spike in wholesale electricity prices.And in 2004, PPL took a $15 million charge to unload its minority interest in Compañía General de Electricidad, or CGE, a utility with customers in Chile and Argentina. It had paid $142 million for shares of the company in 2000.PPL's investment in the United Kingdom has fared much better. In an address to analysts last week, PPL Chief Financial Officer Paul Farr said the company had every intention of holding onto Western Power Distribution, which serves 2.5 million U.K. customers.In comparison, the three Latin American properties have 1.1 million customers and brought in roughly $43 million last year, or 5 percent of PPL's profit.PPL's recent divestitures give it cash that could be used to expand other operations, a possibility Farr alluded to last week. He told Reuters that the company is looking at several power plants that have come to market in the mid-Atlantic region.PPL, one of the Lehigh Valley's two Fortune 500 companies, also has 1.4 million electricity customers in Pennsylvania. Its supply segment, meanwhile, controls about 11,500 megawatts of power production in the United States.PPL stock gained 46 cents per share, or nearly 1 percent, to close Wednesday at $49.44 in trading on the New York Stock Exchange.sam.kennedy@mcall.com610-820-6517