Sale of troubled CEG units finalized

The Baltimore Sun

Constellation Energy Group executives said Monday that they have finalized sales of most of the company's commodities trading operations in Houston and London, part of a strategy to reduce risk and improve liquidity by shedding much of the trading business that led to the firm's financial troubles.

Baltimore-based Constellation said it closed on the sale of its natural gas trading unit in Houston to Macquarie Group of Australia and finalized the sale of its London-based coal, freight and international commodities business to an affiliate of Goldman Sachs. No price was disclosed.

The company also closed a deal in which Macquarie will supply gas to Constellation's Kentucky-based retail gas division, Constellation NewEnergy Gas.

"These transactions will ... strengthen our balance sheet and allow us to focus our efforts on our core businesses" of energy generation and distribution, said Mayo A. Shattuck III, Constellation's chairman, president and chief executive officer.

Constellation said the deals represent key milestones in the company's efforts to restructure after narrowly avoiding bankruptcy late last year. The sales allow Constellation to reduce the $1 billion collateral required to run the trading operations.

More than $500 million has been returned to the company, with the remaining $500 million to be returned as contracts in each of the sold units are terminated, Constellation said Monday.

In September, Constellation had agreed to sell itself to Warren E. Buffett's MidAmerican Energy Holdings Co. CEG abandoned that deal in December for an offer from France's largest utility, Electricite de France, to buy half of Constellation's nuclear power business for $4.5 billion, keeping Constellation an independent company.

The transactions announced Monday leave the company with a scaled-back trading operation in Baltimore, where about 300 employees work on the trading floor or in support jobs for trading and commercial business. The company announced in December plans to lay off more than 800 people, mostly from the commodities trading division, with about half the job cuts in the Baltimore area.

Shares of Constellation, down 77 percent from a year ago, lost 72 cents, or 3.5 percent, to close at $19.90 Monday.

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