Houston-based Calpine, a major player in the U.S. natural gas production sector, announced on October 9 that it had entered into an agreement to acquire Noble Americas Energy Solutions (NAES) – one of the largest independent suppliers of retail power to commercial and industrial customers nationwide.
Strategically, Noble Americas Energy Solutions acts as a conduit for customers to manage their price and energy risk exposure, buying energy wholesale and repackaging that energy into retail products.
According to Hong Kong-based Noble, Calpine will pay more than $1 billion to close the deal – with $800 million upfront, plus the agreement to reimbursement of the working capital of NAES to Noble at closing (which, as of December 31, 2015, amounted to $248 million).
In addition, the divestiture will release $275 million in letters of credit and surety bonds – representing additional working capital, which will become available to Noble.
“The sale of NAES substantially completes the $2 billion capital-raising initiative that we announced in June,” said Noble’s Co-CEOs, Jeff Frase and Will Randall. “With this divestiture, Noble will continue to reduce debt, while also funding growth opportunities in our high-return businesses.”
“We are excited to be acquiring the best commercial and industrial direct energy sales platform in the United States. The acquisition of this well-regarded organization known for providing sophisticated customers with highly customized products is a natural fit with Calpine’s customer-centric culture and will allow us to build upon the success we have experienced since our entry into retail last year through the Champion Energy platform,” said Calpine CEO Thad Hill, adding, “In addition to expanding our retail customer sales channels and product offerings, we will more than double the volume of retail load we are capable of serving across the country from our complementary wholesale power generation fleet.
Closing of the divestiture is subject to approval by Noble shareholders, expiration of the Hart Scott-Rodino waiting period and approval of the U.S. Federal Energy Regulatory Commission under Section 203 of the Federal Power Act.
It is expected that the transaction will close by year-end 2016.