Utilities

Elliott finds another target for its power play

23 Jan 2018

FirstEnergy shares spiked after a $2.5 bln capital injection from the activist hedge fund and others. Elliott is reprising a ploy that made NRG the best performer in the S&P 500 last year. That deal had hiccups though, and the latest one will too. Shareholders should buckle up.

Dominion finds value in Scana’s nuclear meltdown

3 Jan 2018

The Richmond-based energy outfit is acquiring the South Carolina utility in a $7.9 bln stock swap. Cleaning up the financial waste of Scana’s abandoned atomic plant will stretch Dominion’s debt, but gaining customers hungry for its natural gas should compensate.

America better at finding natural gas than using it

29 Dec 2017

Booming production has made the country a net exporter. But consumers are on pace to use less electricity from natural gas in 2017. As issues from Atlanta to Florida pressure the grid, shale’s promises of “energy independence” hit policy and infrastructure obstacles.

Utility merger rightly up against Texas brigade

30 Oct 2017

Vistra is buying Dynegy in an all-stock deal to create a power dynamo stretching from Texas to Maine. It makes sense for shareholders, but regulators in the Lone Star State are prickly. The firms will have to allay concerns that synergies will come out of consumers’ pockets.

German vote bodes ill for utilities and autos

26 Sep 2017

Chancellor Angela Merkel may well turn to the Greens to form a coalition government. The party’s priority is combating climate change. Carbon-heavy power producers like RWE and carmakers wedded to the internal combustion engine are likely to be the first in the firing line.

U.S. electricity grid is a Category 5 problem

18 Sep 2017

Hurricane Irma left much of Florida without power after ripping down transmission lines. Burying cables is one fix, if time-consuming. But storms are just one catastrophe threatening the nation’s aging electricity infrastructure. Upgrading it could cost as much as $2 trillion.

Beware Brazilian promises to relinquish control

23 Aug 2017

The cash-and-corruption-challenged government dangled the idea of reducing its 51 pct voting stake in Eletrobras, the electric utility. While that sent the shares soaring by half, investors need only recall Brasilia's past stewardship at Petrobras and Vale to slow their samba.

Elliott is grasping at straws in Oncor battle

17 Aug 2017

The hedge fund says it has enough debt in the bankrupt utility to block Warren Buffett’s $18 bln offer. Yet the move makes little sense in the absence of a firm alternative. The judge is likely to see through Elliott’s posturing, as is the Omaha sage, who refused to up his bid.

Elliott’s Oncor delay mainly helps Elliott

28 Jul 2017

The hedge fund won more time to find $9 bln to take the Texas utility’s parent out of bankruptcy. Its plan values Oncor more highly than Berkshire Hathaway’s agreed offer. But it looks as if Paul Singer’s fund would get most of the benefit. That makes Elliott’s deal a tough sell.

Elliott tests one of Warren Buffett’s golden rules

11 Jul 2017

Paul Singer's hedge fund has cobbled a rival bankruptcy-exit plan for Energy Future, challenging Berkshire Hathaway's $9 bln deal. The new offer may be a stretch, but Buffett famously eschews competitive processes. He also needs approval from creditors, one of which is Elliott.

Rare sense prevails in reworked U.S. utility deal

10 Jul 2017

Great Plains tried to buy next-door power provider Westar, but regulators nixed the plan. In a new roughly equal $14 bln merger, the target gets a lower headline price and the buyer less control. It's an unusually pragmatic compromise considering how often egos undermine M&A.

Buffett may have to turn on charm for Oncor encore

7 Jul 2017

Berkshire Hathaway is taking a second stab at Texas utility Energy Future, six years after a $2 bln investment led to big losses. Two other suitors failed to agree with regulators. Buffett's structure sounds smarter, but sealing the $18 bln deal could yet require some sweet talk.

Natural gas inflicts fresh wounds on old victim

22 Jun 2017

Southern risks a new writedown after regulators tired of waiting for a novel “clean-coal” plant. As with its troubled nuclear project, the $50 bln U.S. utility tried untested designs. Efforts to diversify fuel sources are admirable but cheap gas prices continue to crush them.

Water investors will get used to cash calls

19 May 2017

Shares in Sao Paulo utility Sabesp plunged on news it may raise equity for post-drought projects. But its funding needs and already high leverage were no secret. With the global water sector requiring $10 trln of investment, this Brazilian capital raise won’t be the last.

Chinese taxpayers have most to fear on Silk Road

16 May 2017

President Xi pledged $124 bln at an international summit to build a modern version of the ancient trading route. Huge global infrastructure spending will burnish Beijing's standing. But the hype could backfire if citizens of the People's Republic fail to reap tangible benefits.

Texas regulators once bitten, twice shy with TXU

12 May 2017

NextEra wants another shot at Oncor after local officials blocked its $18 bln deal to buy the transmission group caught in a 2007 LBO that went under. The Lone Star state reasonably wants Oncor protected, but creditors including Elliott are antsy, and a deal is better than limbo.

Jewel magnates’ Alinta buy is a gift to TPG

16 Mar 2017

The billionaire Cheng clan is snapping up Australia's Alinta Energy from the U.S. buyout firm and others. With a mooted $3 bln price, the surprise deal handily beats a likely IPO valuation. Hong Kong's richest families apparently can't get enough of stable Aussie businesses.

UK, even now, is a good bet for Li Ka-shing

23 Sep 2016

The Hong Kong tycoon is reportedly eyeing $14 bln of gas grids. Never mind Brexit uncertainties or the veto of Li's British mobile merger. UK infrastructure offers solid, stable returns, and this could be a good use of the $7 bln cash pile stranded at Li's Power Assets unit.

China backlash bandwagon rolls over Li Ka-shing

11 Aug 2016

Australia may block an $8 bln power grid sell-off on security grounds, since both bidders had ties to China. But the Hong Kong tycoon is very different from Beijing-owned State Grid. After recent snubs in Britain and Canada, the climate for Chinese investment is souring rapidly.

Hawaiian deal wipes out on isolationist wave

18 Jul 2016

Aloha State regulators blocked NextEra's $4.3 bln acquisition of Hawaiian Electric. A sale to the Florida operator was a neat way to end the utility's odd ownership of a bank and spur investment in solar. Britain isn't the only isle whose protectionist tendencies will be painful.