Subject: UFTO Note — Buying and Selling Power Plants
Date: Tue, 11 Feb 1997 10:22:28 -0800
From: Ed Beardsworth

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| ** UFTO ** Edward Beardsworth ** Consultant
| 951 Lincoln Ave. tel 415-328-5670
| Palo Alto CA 94301-3041 fax 415-328-5675
| http://www.ufto.com edbeards@ufto.com
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Buying and Selling Generation Assets – Conference April 14-15, 1997, New York

As a result of ongoing restructuring of the U.S. Power industry, transfers of generating assets are occurring at an unprecedented scale, and have really only just begun, representing a huge and critical opportunity for industry players to buy/sell/spin-off assets to meets goals, whether for growth, portfolio rebalancing, or entry or exit from the market. Regulated utilities in particular are becoming participants in both small project sales and large portfolio transactions. Yet there are endless issues to be considered, from estimating current asset values and future market conditions, to clarifying regulatory and balance sheet implications, to arranging financing, and managing environmental and other risks.

The conference is being organized by Infocast, Inc, together with Jeffrey C. Bodington, President, Bodington & Co., and will include 2 days of presentations by experts from Industry, Wall Street and Washington, who will outline the critical issues involved. Case studies will serve as examples, providing do’s and don’ts of deal negotiation.

For more information, or copies of the Conference brochure, contact:
Jeff Bodington, Bodington & Co., 415-391-3280, or
Stephanie Thomas, Infocast, 818-902-5400

(Bodington & Co. provides investment banking, consulting services, and management and financial counsel to electricity generators involved in the sale or purchase of power plants.)

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Managing Environmental Liabilities as Buyer or Seller of Generation Assets

Buyers and Sellers need to manage the Environmental risks which often play a big role in these transactions, affecting sale price and contract terms such as indemnification for future liabilities. For a given facility, the risks may or may not be well characterized, creating an unknown in the equation.

Currently, it appears that a Seller’s market exists for generating facilities. Some buyers are anxious to close the deal. They know they can’t be too concerned with trying to negotiate down the price, and don’t want to look too closely at any discouraging news about what they’re buying, such environmental risks. (More accurately, the people working for the buyer companies can have career incentives to close the deal, and don’t want to slow things down for problems that will only become apparent long after.) Clearly, this could have unfortunate consequences for the Buyer, and also for the Seller, who will still be responsible as the prior owner.

Selling utilities may want, or find themselves forced, to be very upfront about such liabilities. Detailed environmental and regulatory risk assessments can be performed on behalf of either side, and a comprehensive strategy can and should be developed (particularly for companies doing large scale divestiture of many facilities).
For more information, contact UFTO.