July 3, 2003
American Securities Capital Partners, Private Power Join To Acquire Operating Subsidiaries of Primar
American Securities Capital Partners LLC, (ASCP) a New York private equity investment firm, and Private Power LLC, (Private Power) a privately held on-site power development firm, announced today an alliance to pursue acquisitions of power generation assets and agreement to acquire six operating subsidiaries of Primary Energy, Inc., ("Primary Energy") a subsidiary of NiSource Inc. (NYSE:NI).
In addition, the acquisition will include the Primary Energy name and rights to certain projects under development by Primary Energy. The value of the transaction was put at approximately $335 million in cash and assumed debt. The new venture will be called Primary Energy Holdings, LLC.
The six subsidiaries, all in Northern Indiana, have capacity to generate 440 megawatts (MW) of electric power and/or 460 MW of thermal energy, largely by recycling blast furnace gas and waste heat from coke ovens and gas-fired power generation. These efficient combined heat and power facilities (CHP) are expected to operate under long-term contracts with Ispat Inland, International Steel Group and U.S. Steel.
Michael G. Fisch, president of ASCP, said, "In partnership with the management team of Private Power, we are seeking to acquire distributed power generation assets that combine generation of heat and power and district heating and cooling systems. As our first acquisition, Primary Energy is an outstanding fit with this strategy."
"Our association with Private Power," he said, "means that we are allied with a team that has had many years of very successful, hands-on experience in the power industry."
Private Power was established in 2001 by Thomas R. Casten, founder and former president of Trigen Energy Corporation, and William Rockford, former head of the Global Power, Project Finance and Environmental Group of Chase Manhattan Corporation. The company's mission is to acquire, develop, finance and operate on-site heat and power projects that recycle otherwise wasted energy.
Primary Energy's senior managers and all of Primary Energy's current staff whose roles are dedicated to the plants being purchased have been offered positions in the new company. The company will continue to focus on recycling energy to produce highly competitive heat and power for large industrial customers, shielding them from volatile energy prices and supply interruptions while reducing the environmental impact of the host plants by recycling waste energy.
"We will build on the Primary Energy assets and team to acquire and develop other energy recycling projects that generate profits while reducing customers' costs, fuel use and pollution," said Casten, who is the chairman and chief executive officer of Private Power. "Distributed energy, as represented by these acquired projects, can earn profits while addressing all of our nation's pressing energy issues, including volatile and rising fossil fuel prices, electric system vulnerability, transmission congestion, national security concerns and human-induced pollution and climate change."
Joe Turner, Primary Energy's founder and managing director, commented, "Primary Energy's customers have huge energy requirements, and the expanded team will continue to focus on developing new solutions to meet their energy and environmental needs. The Primary team is excited to become part of a company focused solely on recycling energy and on-site generation."
Under the agreement, ASCP and Private Power will purchase the following subsidiaries of Primary Energy:
* Lakeside Energy Corp., a 161-megawatt (MW) CHP facility that provides electricity and process steam to U.S. Steel's Gary Works in Gary, Ind.;
* Cokenergy, Inc., a 95-MW waste heat recovery, CHP facility that provides electricity and process steam to Ispat Inland Inc.'s steelmaking operations in East Chicago, Ind.;
* North Lake Energy Corp., a 75-MW steam turbine generator that uses steam produced from blast furnace gas at Ispat Inland in East Chicago, Ind.;
* Portside Energy Corp., a 63-MW trigeneration facility that supplies process steam, hot softened water and electricity to U.S. Steel's steel finishing operations in Portage, Ind.;
* Ironside Energy LLC, a 50-MW CHP facility that provides steam and electric power to International Steel Group's (ISG) operations in East Chicago, Ind.; and
* Harbor Coal Company, a 50 percent general partner in PCI Associates, a joint venture pulverized coal injection facility with Ispat Inland at the steel maker's integrated steel mill in East Chicago, Ind.