Sunday, November 22, 2015

A few more details on the AEP-ACBL deal

Most guys I knew spent the day watching football or doing interesting stuff. Me, I spent it trying to build an Excel file of some data I'm interested in. This evening, while my Bengals are on TV, I'm here going through documents looking for interesting stuff.

About everyone on here knows AEP has closed the sale of its River Transportation Operations to ACBL. As AEP is a company with publicly traded stock, it has to make certain disclosures to the Securities and Exchange Commission. I took a look at AEP's most recent filings to see if there was anything interesting about the ACBL deal. There were a few things in the quarterly report. I have copied and pasted some of those below.

To see the entire document, click here.

Here are the excerpts for those who are interested:





AEP RIVER OPERATIONS

Third Quarter of 2015 Compared to Third Quarter of 2014

Earnings Attributable to AEP Common Shareholders from our AEP River Operations segment decreased from $11 million in 2014 to $4 million in 2015 primarily due to a loss on AEPRO's equity investment in IMT due to bankruptcy of an IMT customer.

Nine Months Ended September 30, 2015 Compared to Nine Months Ended September 30, 2014

Earnings Attributable to AEP Common Shareholders from our AEP River Operations segment decreased from $17 million in 2014 to $16 million in 2015 primarily due to a loss on AEPRO's equity investment in IMT due to bankruptcy of an IMT customer, partially offset by lower fuel prices and reduced consumption.

--###--

AEP River Operations



Commercial barging operations that transports liquids, coal and dry bulk commodities primarily on the Ohio, Illinois and lower Mississippi Rivers.



In October 2015, we signed an agreement to sell AEPRO to a nonaffiliated party. The AEP River Operations segment is comprised entirely of AEPRO. However, we will retain AEPRO's investment in IMT. See "AEPRO (AEP River Operations Segment)" section of Note 6 for additional information.

--###--


Disposition of AEP River Operations
In October 2015, we signed an agreement to sell our commercial barge transportation subsidiary, AEPRO, to a nonaffiliated party.  The sale of AEPRO is subject to regulatory approval including federal clearance pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976.  Upon close of the sale, the nonaffiliated party will acquire AEPRO by purchasing all of the common stock of AEP Resources, Inc., the parent company of AEPRO.  The nonaffiliated party will assume certain assets and liabilities of AEPRO, excluding the equity method investment in International Marine Terminals (IMT) which is a bulk commodity transfer facility jointly owned with Kinder Morgan L.P. "C", pension and benefit assets and liabilities and debt obligations.  We expect to net approximately $400 million in cash after taxes, debt retirement and transaction fees.  The sale is expected to close in the fourth quarter of 2015. An after tax gain ranging from approximately $100 million to $150 million is expected from the sale subject to working capital and other adjustments.

--###--

ASSETS AND LIABILITIES HELD FOR SALE

AEPRO (AEP River Operations Segment)

During the third quarter of 2015, we evaluated bids from prospective buyers, selected a buyer and received approval from AEP's Board of Directors to proceed with the sale to the nonaffiliated party.  In October 2015, we signed an agreement to sell our commercial barge transportation subsidiary, AEPRO, to a nonaffiliated party.  The sale of AEPRO is subject to regulatory approval including federal clearance pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976.  Upon close of the sale, the nonaffiliated party will acquire AEPRO by purchasing all of the common stock of AEP Resources, Inc., the parent company of AEPRO.  The nonaffiliated party will assume certain assets and liabilities of AEPRO, excluding the equity method investment in IMT, pension and benefit assets and liabilities and debt obligations.  We will retain ownership of our captive barge fleet that delivers coal to the company's regulated coal-fueled power plant units owned or leased by AEGCo, APCo, I&M, KPCo and WPCo.  We signed a contract with the nonaffiliated party to dispatch and schedule our captive barge fleet for the company's regulated coal-fueled power plant units.  We also contracted with the nonaffiliated party to barge coal for AGR. These agreements with the nonaffiliated party extend through the end of 2016.  The sale is expected to close in the fourth quarter of 2015.