According to an article on Bloomberg.com, “AES to Sell Stock, Wind-Power Stake to China’s CIC”
If anyone, anywhere, anytime actually believes this wind business is for the benefit of United States Citizens, I encourage them to comment. I’m at a loss so see any redeeming value to the sham that is wind power. Maybe I can be persuaded.
Here’s the text of the article:
By Mark Chediak
Nov. 6 (Bloomberg) — AES Corp., the U.S. power producer with operations in 29 countries, agreed to sell stock and a 35 percent stake in its wind-power business to China Investment Corp. for $2.2 billion to raise cash for expansion.
A CIC unit will buy 125.5 million in new shares for $12.60 each, or $1.58 billion, Arlington, Virginia-based AES said today in a statement. CIC will own about 15 percent of the power company. AES also signed a letter of intent to sell a 35 percent interest in its wind-power operations to CIC for $571 million.
The transactions will give AES greater financial flexibility and allow the company to move more quickly on project developments, Chief Executive Officer Paul Hanrahan said. AES, which will need approval from the Committee on Foreign Investment in the United States to close the stock sale, also will gain cash for acquisitions.
“This just gives us a war chest of dry powder to execute on mergers and acquisitions,” Hanrahan said in a telephone interview. Access to capital markets has been “choppy,” he added, and any investment AES makes would need to be funded with equity or cash flow.
AES rose 17 cents, or 1.2 percent, to $14.03 in New York Stock Exchange composite trading. The stock has jumped 70 percent this year.
The company sees a number of “attractively priced” acquisition prospects around the world, Hanrahan said, without identifying any specific targets. AES is looking to expand its generation capacity in Asia, where power demand is growing faster than in the U.S., he said.
“This will be a great way for us to do business in Asia,” Hanrahan said.
Earlier today, AES posted a 28 percent gain in third- quarter profit after gains from its operations in Latin America and Asia made up for a demand slump in the U.S. The CIC transactions will reduce 2010 earnings per share from continuing operations by about 12 cents, the company said.
CIC, China’s sovereign wealth fund, said last month that it has $110 billion for overseas investments and will focus on buying into commodities companies and property to protect against accelerating inflation.
On Sept. 30, CIC said it bought an 11 percent stake in JSC KazMunaiGas Exploration Production, the London-traded unit of Kazakhstan’s state-run energy company, for about $939 million. A week earlier, it bought $1.9 billion of debt from PT Bumi Resources, Indonesia’s biggest coal producer, and paid $850 million for a 15 percent stake in Noble Group, a Hong Kong-based commodity supplier.
Overseas investments by Chinese companies surged 190 percent from a year earlier to $20.5 billion in the third quarter, according to the nation’s Commerce Ministry. AES gets more than 80 percent of its revenue from outside the U.S.
“The Chinese government has a lot of money to invest globally, and investing in AES is a great way for them to do this,” said Ryan McLean, an analyst at Morningstar Investment Services who rates AES shares at three stars out of five and owns none.
AES got 7.5 percent of its 2008 revenue from Asia, according to data compiled by Bloomberg. To the extent CIC’s investment gives AES more access to China, the world’s most populous nation, the transactions will be a positive for the power producer, McLean said.
AES said it expects regulatory approvals for the stake sale in the first half of next year.
The CIC transactions shouldn’t raise any concerns over national security, AES’s Hanrahan said. CIC’s investment will help fund purchases of wind turbines and solar panels in the U.S., he said. The company plans to use U.S. suppliers.
The Obama administration should bar a $1.5 billion Texas wind-farm project from receiving government stimulus funds because most of the turbines will be made in China, U.S. Senator Charles Schumer, a New York Democrat, said yesterday. A-Power Energy Generation Systems Ltd., developer of the Texas wind farm, said its project doesn’t involve stimulus funds.
Hanrahan said he doesn’t expect CIC’s involvement to affect AES’s access to stimulus funds. “Anyone can buy our equity, and this is just new capital coming into the company,” he said.
The company applied for stimulus money for a renewable- energy-storage project, Hanrahan said. AES has 1,300 megawatts of wind-power projects under development. One megawatt is enough power for about 800 average U.S. homes, according to an estimate by the Energy Department in Washington.
“A lot of the value that we have, I think, is in the development pipeline,” Hanrahan told investors today on a conference call.
AES spokesman Meghan Dotter said the company was advised by Deutsche Bank AG on the stock sale and by Citigroup Inc. on the wind-power deal.
China’s Cnooc Ltd. bowed out of a 2005 battle with San Ramon, California-based Chevron Corp. to acquire Unocal Corp. after concluding U.S. lawmakers would scuttle any deals on national security concerns.
Last Updated: November 6, 2009 16:08 EST
Additional posts: … “Wow! Someone’s starting to get the message: “Senator (Schumer): No fed money for US-China wind project”” … “Oh! … and about that wind energy stimulus money going overseas … you’ll really like this!” … “More good news from the Wind Energy Sector – “More than eight out of 10 US stimulus dollars spent on wind energy farms have gone to foreign companies””