Carlyle Group agreed Friday to acquire Cogentrix Energy LLC's North American power assets from Goldman Sachs Group Inc. The secondary buyout is valued at more than $200 million, not including the assumption of more than $325 million in projected debt, according to two sources close to the situation.
Cogentrix's North American unit, which contains the bulk of the company's assets, consists of five coal and solar power projects in California, Colorado Florida and Virginia, and as well as a development pipeline of gas and renewable power projects. "There are some small residual international assets, but it is primarily a U.S. business," a source said. Carlyle declined to comment.
The 29-year-old company is based in Charlotte, N.C., and its assets generate more than 7,000 net megawatts.
Coming off a busy summer of dealmaking, Carlyle is making the Cogentrix investment through its $1.14 billion infrastructure fund. The transaction is expected to close in the fourth quarter. Goldman bought Cogentrix for $2.4 billion in 2003, investing $115 million of equity and borrowing $2.3 billion of debt. It will maintain a minority stake in the company after the Carlyle deal closes.
"This deal has nowhere near the same amount of debt," one source said, referring to Goldman's original leverage buyout in 2003. A second source added that Carlyle's "share of the [projected] debt is somewhere in the range of $325 million." The deal includes no corporate debt, only project debt, the source said, noting that the five-month-long sale process was not a formal one, with no bankers involved, and attracted bidders other than Washington-based Carlyle.
During Goldman's tenure Cogntrix has unloaded about half dozen assets. Most recently it sold its 258-megawatt Cedar Bay generating facility to Beowulf Energy LLC and Paul Prager for an undisclosed sum. The Jacksonville, Fla., plant provides electricity to Florida Power & Light Co. under an agreement ending in 2024 and up to 380,000 pounds per hour of steam to Smurfit-Stone Container Corp.'s recycled linerboard plant.
Carlyle has been of late an active acquirer of energy assets. In July it agreed to form Philadelphia Energy Solutions as a joint venture with Sunoco Inc. It also invested in Plainfield Renewable Energy, a biomass facility in Connecticut; TexOak Energy, an upstream oil and gas company with assets in Texas and Oklahoma; Black Raven Energy, an exploration and production company in Denver, and Core Minerals Operating Co., an exploration and production company in Evansville, Ind.
Vinson & Elkins LLP's Keith Fullenweider and Maritza Okata counseled Carlyle. Latham & Watkins LLP's David Allinson represented Goldman.