American Electric Power (Nasdaq: AEP) has signed an amended agreement on the sale of its Kentucky operations to Liberty and expects to close on the sale in January 2023 following approval of the transaction from the Federal Energy Regulatory Commission (FERC), which is due by Dec. 16. The amendment has no impact on AEP's planned equity needs or operating earnings guidance.
Upon close of the sale, Liberty will acquire AEP's Kentucky operations by purchasing all the stock of Kentucky Power and AEP Kentucky Transco for a reduced price of $2.646 billion. AEP expects to receive approximately $1.2 billion in cash, net of taxes and transaction fees. The company anticipates recording a pre-tax GAAP loss ranging from $180 million to $220 million in the third quarter of 2022 as a result of the amendment and the change to the expected timing of the completion of the transaction.
"I want to thank the employees in Kentucky for their continued focus on delivering safe and reliable power to customers. This sale will provide significant benefits to customers in eastern Kentucky to help offset volatile fuel prices and support economic growth. It also will support AEP's ability to invest in projects throughout our regulated businesses that will enable the move to a clean, more reliable and resilient energy system," said Nicholas K. Akins, AEP chair and chief executive officer.
"The updated timeline for closing the sale will not have an impact on our planned equity needs or the operating earnings guidance we have provided," said Julie Sloat, AEP president and chief financial officer. "We look forward to receiving approval from FERC and completing the transaction to allow the customer benefits to begin flowing."
AEP also announced that Brett Mattison, president and chief operating officer (COO) of Kentucky Power, has been named president and COO of Southwestern Electric Power Company, effective Jan. 1. Mattison succeeds Malcolm Smoak, who is retiring from the company at that time. Liberty previously announced David Swain will lead the Kentucky operations when the transaction is finalized. Liberty is the regulated utility business of Algonquin Power & Utilities Corp. (NYSE: AQN).