Business Context and Reporting Period
Company: Black Hills Corporation
Filing Type: Form 8-K (Current Report)
Date of Report: April 29, 2008
Event: Entry into a Material Definitive Agreement to sell independent power production (IPP) assets.
Key Financial Metrics and Transaction Details
Transaction Value: $840 million cash (subject to working capital adjustments).
Assets Sold: Gas-fired power plants with a total net capacity of 974 megawatts.
Buyer: Southwest Generation Operating Company, LLC (affiliates of Hastings Funds Management Ltd and IIF BH Investment LLC).
| Asset Name | State | Capacity (MW) |
|---|---|---|
| Fountain Valley | Colorado | 240 |
| Las Vegas II | Nevada | 224 |
| Valencia (under construction) | New Mexico | 149 |
| Arapahoe | Colorado | 130 |
| Harbor Cogeneration | California | 98 |
| Valmont | Colorado | 80 |
| Las Vegas I | Nevada | 53 |
| Total | - | 974 |
Note: This filing does not provide revenue, profit, cash flow, margin, debt, or liquidity metrics for the company's ongoing operations.
Material Changes and Conditions
- Retention Right: Black Hills retains the right to keep the Fountain Valley plant (valued at $240 million of the total purchase price) if closing conditions for a planned acquisition of utility assets from Aquila, Inc. are not met.
- Closing Conditions: The sale is subject to:
- Approval by the Federal Energy Regulatory Commission (FERC).
- Expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Act.
- Approval by the Committee on Foreign Investment in the United States (CFIUS).
Outlook, Risks, and Management Commentary
Management Commentary: The company entered into a definitive agreement to divest specific IPP assets to a private investment group. The transaction is structured as a cash sale.
Risks and Contingencies:
- Regulatory Risk: Completion depends on FERC, antitrust, and CFIUS approvals.
- Acquisition Dependency: The sale of the Fountain Valley asset is contingent on the success of a separate acquisition from Aquila, Inc.
Unusual Items: None reported beyond the material asset sale.
Key Facts for Investor Verification
- Verify the status of the planned acquisition of utility assets from Aquila, Inc., as this determines whether the Fountain Valley plant is sold or retained.
- Monitor regulatory filings for FERC, antitrust, and CFIUS approval status.
- Confirm the final purchase price after working capital adjustments are calculated at closing.
- Review the impact of this $840 million cash inflow on the company's future capital allocation strategy and debt levels.