Complete Energy to Merge with GSC SPAC
The Houston energy company's two natural gas plants are valued at $1.3 billion
May 12, 2008
Houston-based Complete Energy Holdings agreed to merge with the GSC Acquisition Co. SPAC, managed by New Jersey-based money manager GSC Group, in a deal that values the energy company at $1.3 billion.
Complete Energy runs natural gas power plants, the La Paloma plant near Los Angeles and the Batesville plant in northern Mississippi. The deal values La Paloma att $900 million, or $881 per kilowatt, with Batesville at $400 million, or $477 per kilowatt.
"We expect strong growth in demand for electricity in the U.S., combined with the lack of significant investment in generation in recent years, to create opportunities for increased value," said Complete Energy chief executive Hugh Tarpley. "Our assets are strategically located, highly efficient and have the potential for expansion."
Under the terms of the deal, which must still pass a shareholder vote, GSC Acquisition will issue about $440 million in new equity to Complete Energy's owners as well its other debt and equity holders. The SPAC will then assume about $627 million of net project-level debt, retire other debt and pay expenses of about $183 imllion. A SPAC unit will additionally issue a $50 million mezzanine note.
As an earnout, Complete Energy's owners and shareholders will receive five million added GSC Acquisition shares if the stock price reaches $14.50. Five million more shares will be issued if the stock price hits $15.50 within five years, with management receiving about 36% of the contingent shares.
Investment funds affiliated with money manager TCW Group will become GSC Acquisition's largest shareholders, at about 19%. Existing SPAC investors will together hold about 42%, with Complete Energy' s current owners holding about 10%.
In a press release Monday, Complete Energy said the combined company will continue to be led by Tarpley and chief operating officer and president Lori Cuervo, the company's two founders.
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