Duke Energy Corp. (NYSE:DUK) has announced plans to sell its Brazilian unit for about $1.2 billion, including debt, to clean energy company China Three Gorges Corp. Duke currently owns 2,090 megawatts (MW) of power generation facilities in Brazil. It has eight hydroelectric plants, with 2,057 megawatts of capacity located on the border between the states of Sao Paulo and Parana. There is also two small hydroelectric plants, each with a capacity of 16.5 MW, located on the Sapucai Mirim River in northern Sao Paulo state.
Duke said it would use proceeds from the sale to reduce its debt of about $39.93 billion, as of June 30. The company’s financial advisers were Credit Suisse and J.P. Morgan and its legal adviser was Skadden, Arps, Slate, Meagher & Flom LLP. Duke shares rose 40 cents to $76.97 at 9:34 a.m. in New York.
Duke Energy said it was looking to sell its international assets in February. The company sells and markets electric power, natural gas and natural gas liquids in Central and South America. The international business spans Argentina, Brazil, Chile, Ecuador, El Salvador, Guatemala and Peru. In 2015, the business accounted for nearly 5 percent of Duke Energy’s total operating revenue.
The company is planning to sell its remaining assets in Central and South America. The sale will limit the company’s exposure to economic weakness and currency fluctuations in the region. Duke is turning its focus to the regulated power markets in the United States to drive more stable earnings and cash flow growth.
Duke Energy is the biggest U.S. power company by generation capacity. The company owns 4,400 MW of power generation facilities. Duke will release its third quarter 2016 financial results at 7 a.m. ET on Friday, Nov. 4. An earnings conference call for analysts is scheduled for 10 a.m. ET that day. The conference call will be hosted by Lynn Good, chairman, president and chief executive officer, and Steve Young, executive vice president and chief financial officer.
Duke and other U.S. utilities are shifting away from coal-fired generation to focus on cleaner natural gas and renewable energy. The company agreed to acquire southeastern U.S. natural gas distributor Piedmont Natural Gas Co. for $4.9 billion last year. Duke said it will build out Piedmont’s pipeline system to support its transition to gas-fired generation, eventually eliminating coal entirely.