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Cinergy Projects Financial Impact From Midlands Sale.


Cinergy Corp. expects to realize a gain of approximately $.50 cents per share in the third quarter from the company's sale of Midlands Electricity plc to GPU Inc. After deducting financing, transaction and currency costs, the net contribution to earnings will be approximately $.43 cents per share.

Cinergy and GPU announced an agreement today for Cinergy to sell its 50 percent interest in Midlands for approximately $700 million, a net cash transaction of approximately $600 million after income taxes. Including Cinergy's share of liabilities assumed by GPU, the transaction is valued at approximately $1.55 billion. The purchase is expected to be complete by mid-July.

Under the agreement Cinergy will be retaining Midlands' gas trading operation headquartered in London. Cinergy's international energy project development subsidiary, Cinergy Global Power Services Ltd., also will continue to have a strong presence in the United Kingdom from bases in Stratford-upon-Avon and London. Cinergy Global Power's current portfolio of international energy investments is unaffected by this transaction.

Cinergy plans to reinvest its earnings in growth initiatives in the United States and abroad as well as to reduce existing corporate debt.

"This has been a successful investment for us," said James E. Rogers, Cinergy president and chief executive officer. "As Midlands makes a strategic move to focus on its regulated operations, we're gaining flexibility to pursue growth in new investments domestically and internationally. We also are maintaining two promising growth platforms in the U.K. -- international energy project development and gas trading."

Cinergy and GPU jointly acquired the British regional electric company in 1996 through Avon Energy Partners plc in a transaction valued at approximately $2.7 billion. Cinergy's equity investment at that time was $500 million. In anticipation of a fully competitive U.K. electricity market, Midlands initiated the sale of the competitive supply part of its operation to National Power in 1998. Midlands retained the regulated distribution lines and substations in the transaction that was completed last week.

Cinergy (NYSE:CIN) is one of the United States' leading diversified energy companies. Its operating companies, The Cincinnati Gas & Electric Company and PSI Energy Inc., serve more than 1.4 million electric customers and 471,000 gas customers in Ohio, Indiana and Kentucky.

Cinergy's 1998 revenues were $5.9 billion, and its total assets are $10.3 billion. Cinergy's energy system comprises approximately 11,000 megawatts at 14 baseload stations and seven peaking stations. Its natural gas distribution system is connected to six interstate pipelines.
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Publication:Business Wire
Geographic Code:1USA
Date:Jul 6, 1999
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