Baltimore's Constellation Energy Group Inc. is nearing an agreement to sell to Electricite de France SA half of its nuclear-power business for $4.5 billion and terminate a planned takeover of the entire company by Warren Buffett's MidAmerican Energy Holdings Co., according to a published report last night.
Bloomberg News, citing people familiar with the situation, said the parent company of Baltimore Gas and Electric favors the sale to Paris-based EDF, Constellation's largest shareholder and its partner in new nuclear development. The agreement is contingent on waivers of bank covenants and might be announced as early as this week, said one of the people, who declined to be identified because the talks are private, according to Bloomberg.
Last night, Constellation spokesman Rob Gould referred to the company's Dec. 8 announcement that it would begin talks with EDF on its unsolicited bid.
"Discussions are ongoing," Gould said.
EDF spokesman Francois Molho couldn't immediately be reached for comment last night. MidAmerican spokeswoman Ann Thelen reiterated last night that the company is not commenting on discussions between EDF and Constellation.
Constellation, one of the Baltimore area's largest companies, agreed three months ago to sell itself to MidAmerican for $4.7 billion to avoid a near bankruptcy as its commodities trading operation faced a liquidity crisis amid the financial sector meltdown.
EDF, whose earlier bid was rebuffed by Constellation, offered to pay nearly the same price as MidAmerican to purchase half of Constellation's nuclear business, which includes Calvert Cliffs plants in Southern Maryland. Constellation agreed last week to begin talks with EDF.
EDF has offered a $1 billion down payment and $3.5 billion upon closing for a 50 percent stake in a joint venture owning Constellation's five reactors. EDF also said it would be willing to buy as much as $2 billion of non-nuclear power plants at fixed prices should Constellation need the money. The companies have a 50-50 venture to build nuclear reactors.
As part of the deal with Constellation, Buffett agreed to provide an immediate $1 billion cash infusion, averting a credit downgrade that "was likely to lead to bankruptcy," Constellation said in a Nov. 25 filing.
