American Electric Power (Nasdaq: AEP) has entered into a strategic agreement to sell its 50% interest in New Mexico Renewable Development, LLC (NMRD) to Exus North America Holdings, LLC (Exus). AEP and PNM Resources, jointly owning NMRD, have agreed to sell their portfolio of 15 solar projects, totaling 625 megawatts (MW), to Exus for approximately $230 million. AEP’s share of the sale amounts to roughly $115 million.

Financial Implications and Closing Expectations

AEP anticipates receiving about $104 million in cash after accounting for tax, transaction fees, and other customary adjustments. The sale, expected to close in February 2024, is anticipated to have a non-material impact on the company’s financial results.

AEP’s Strategic Business Focus

Julie Sloat, AEP chair, president, and chief executive officer, explained that this sale aligns with AEP’s strategy to simplify its business and focus on core regulated operations. The sale is part of AEP’s broader plan to de-risk the company, following a $1.5 billion sale of other parts of its contracted renewables business earlier in the year. Proceeds from these sales are being used to strengthen AEP’s balance sheet and support efforts to provide safe, reliable, and affordable electricity.

Portfolio and Regulatory Approval Details

The NMRD portfolio includes nine operating solar developments (185 MW) and six projects under development (440 MW). The sale is contingent on regulatory approval by the Federal Energy Regulatory Commission, New Mexico regulatory approvals for one of NMRD’s projects, and clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Advisory and Legal Support for the Transaction

KeyBanc Capital Markets is serving as the financial advisor, and Foley & Lardner LLP is providing legal counsel to AEP and PNM Resources in this transaction.

Conclusion: AEP’s Renewable Energy Shift

American Electric Power’s sale of its interest in New Mexico Renewable Development to Exus North America Holdings marks a significant move in the renewable energy sector. This transaction represents AEP’s commitment to streamlining its operations and focusing on core business areas, while simultaneously contributing to the growth of sustainable energy solutions. With this strategic divestiture, AEP sets a new course in its investment strategy, placing a strong emphasis on regulated operations and financial stability.

  American Electric Power, Exus North America, Julie Sloat, New Mexico, New Mexico Renewable Development, renewable energy