TransCanada Corporation said that it has reached an agreement to acquire the Ironwood natural gas-fired, combined cycle power plant in Lebanon, Pennsylvania, with a nameplate capacity of 778 megawatts, from Talen Energy Corporation for US$654 million.
At closing, US$42 million in debt will be assumed and then repaid within 45 days of closing out of funds placed into escrow by the seller, the company said on Thursday.
The Ironwood power plant delivers energy into the PJM power market, North America’s largest and most liquid energy region which includes a three-year forward capacity market. Located in proximity to the Marcellus shale gas play, the facility is positioned to access competitively priced natural gas in a market that is in the midst of transitioning away from coal-fired power generation to gas.
The acquisition is expected to be immediately accretive to earnings and cash flow and generate approximately US$90-$110 million in earnings before interest, taxes, depreciation and amortization annually through a combination of capacity payments and energy sales.
The acquisition will be financed with a combination of cash on hand and available debt capacity.
The transaction is expected to close early in the first quarter of 2016.
LNG World News Staff; Image: Talen Energy