July 28, 2004
By Bradley Keoun
July 28 (Bloomberg) -- ArcLight Capital Partners
LLC, manager of a $1.6 billion buyout fund that
invests in the energy industry, has bought
stakes in 10 California power plants from John
Hancock Life Insurance Co. for $28 million.
John Hancock, a unit of Toronto-based Manulife
Financial Corp., on Friday exercised an option
to buy the stakes from Houston-based El Paso
Corp. John Hancock, which already was a
part-owner of the plants, didn't want to assume
the management role that would come with El
Paso's share, Daniel Revers, managing partner of
Boston-based ArcLight, said in an interview.
John Hancock ``wanted us as a partner, and so
we jumped in,'' Revers said. Another partner of
ArcLight's, Morristown, New Jersey-based Delta
Power Co., will oversee management of the
plants, he said. John Hancock will retain its
original stake.
The 10 plants were among 25 in the U.S. that
El Paso agreed in January to sell to Northern
Star Generation LLC, which is jointly owned by
affiliates of American International Group Inc.
and the Ontario Teachers' Pension Plan. As a
part-owner of the plants, John Hancock had a
right of first refusal to match the Northern
Star offer.
El Paso, the biggest U.S. pipeline operator,
has been selling assets to repay debt. John
Hancock is an investor in the ArcLight fund,
along with other institutional investors such as
the University of Texas, Caisse de Depot et
Placement du Quebec and the California Public
Employees Retirement System.
Gas-Fired Plants
The California plants, eight of which are
located in Bakersfield, are known as the Juniper
Generation Plants, according to El Paso
documents. The natural gas-fired stations can
generate a combined 681 megawatts, or enough
power for about 550,000 average U.S. homes. El
Paso's interest totaled 172 megawatts. The
purchase from John Hancock marks the ArcLight
fund's fourth investment, bringing total
commitments to about $160 million, Revers said.
A separate ArcLight fund has invested about $950
million, including the purchase in March of 12
power plants from Aquila Inc. for about $257
million.
Dean Vanech, president of Delta Power, said in
an interview that an affiliate of his company
plans to hire about 105 El Paso employees who
run the Juniper plants. Delta Power currently
has about 210 employees, he said. ArcLight
yesterday said it and Caithness Energy LLC, a
private power-plant developer and operator based
in New York, agreed to buy stakes in 12 power
plants and a natural gas pipeline from PG&E
Corp.'s National Energy & Gas Transmission Inc.
for about $558 million.
The sale is part of National Energy's plan to
exit bankruptcy proceedings, and other bidders
will have a chance to beat ArcLight's offer in a
bankruptcy auction later this year, Revers said.
``You've got to go through the bankruptcy
process, but we're optimistic that we'll get it
done,'' he said, referring to the transaction. |
