Ameren Corp.(St. Louis, Missouri, U.S.) reveled recently that it will buy Cilcorp Inc. (Peoria, Illinois, U.S.) from AES Corp. (Arlington, Virginia, U.S.) for $540 million in cash. This purchase will create Ameren not only as a large utility in Missouri but creates it as Illinois' second-largest utility.
Ameren will also take on $860 million worth of debt and preferred stock in exchange for Cilcorp's business, which includes the Central Illinois Light Co. (CILCO) utility and 1,200 megawatts of coal-fired generation capacity. The deal includes the purchase of AES Medina Valley Cogen, a 40-megawatt, gas-fired power plant. Cilcorp, which has 200,000 natural gas and 200,000 electricity customers, will become an Ameren subsidiary, but will remain a separate utility company known as AmerenCILCO.
The sale by AES, which is struggling with concerns about its credit quality, is part of the company's plan to shore up its balance sheet. That plan includes raising about $1.5 billion from asset sales. AES bought Cilcorp in 1999 for $885 million in cash and the assumption of $412 million in debt. The company said the deal would strengthen its balance sheet.
The deal, awaiting appropriate regulatory approval from the Illinois Commerce Commission, the Securities and Exchange Commission, and the Federal Energy Regulatory Commission, is expected to close in the first quarter of 2003.