FirstEnergy Corp. is getting a $2.5 billion investment as part of its effort to exit the power generation business.
The equity infusion – from affiliates of Elliott Management Corporation, Bluescape, GIC and Zimmer Partners LP — incorporates a previously announced plan to raise $1.5 billion. The proceeds of the private offering will be used to reduce $1.5 billion in holding company debt, contribute $750 million to FirstEnergy’s pension fund and for general corporate purposes.
The move resulted in a nearly 9 percent surge in the company’s stock price to $32.45 a share on Jan. 22.
As part of this transaction, FirstEnergy will form a Restructuring Working Group to minimize the time to exit its unregulated coal-fired and nuclear power generation business, which has been under pressure from lower-cost natural gas competitors.
“This investment will enable us to accelerate FirstEnergy's growth and infrastructure improvement plans for our transmission and distribution business, which will benefit our six million customers," Charles E. Jones, president and CEO of FirstEnergy, said in a statement.
The company said the move provides a significant boost to its regulated growth strategy, focus on growth in the regulated distribution and transmission businesses, and repositions the company as a premier, high-growth, pure-play regulated utility.
Legal adviser: Jones Day
Financial adviser: Moelis & Co. LLC
