Teco sell off

TECO Energy is selling off its remaining investments in international power plants.
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San Jose station in Guatemala, courtesy Teco

Staff Reporter

The Florida-based utility has entered into separate agreements to sell its stakes in Guatamala power stations Alborada and San Jose, and related solid fuel-handling and port facilities, for $227.5 million.

Sur Electrica Holding is buying the Alborada power station.

Renewable Energy Investments Guatemala has agreed to buy the San Jose station and the related solid fuel-handling and port facilities.

Due to certain preferential rights held by a third party to purchase the equity interests in the San Jose parcel, the ultimate buyer could change.

That means Teco may have to wait for its money from that sale because the closing on the sale of those interests could occur as late as March.

After those sales do close, Teco will use the roughly $223 million proceeds to repay $25 million of San Jose Power Station project debt.

It expects to apply the remaining proceeds in a balanced fashion to repurchase common stock and reduce its debt.

The sale is expected to be earnings dilutive for 2013 and 2014 because benefits from share repurchases and debt retirements will not fully offset the elimination of the Teco Guatemala net income of about $20 million a year.

In addition, the business absorbed about $6 million, pre-tax, of allocated interest annually.

The sale eliminates uncertainties in 2015 and beyond associated with the Alborada Power Station power sales contract, the expiration and extension of the San Jose Power Station power sales contract, and the third party’s rights to buy a 50% stake in the San Jose Power Station.

That, Teco argues, means the dilutive effective could be negligible by that time.

Teco Energy chief executive officer John Ramil said the agreements positioned the company to complete its exit from the Guatemalan power sector.

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