, the Albuquerque based electricity company, agreed with Sempra Generation to acquire a coal power plant for $480 million in cash. The transaction will be accretive to earnings in the first 18 months of ownership, PNM said.
The Twin Oaks Power facility, a 305-megawatt plant located 150 miles south of Dallas, is part of a strategy under which PNM is expanding its merchant generation fleet to serve a growing wholesale market in the Southwest and in Texas. The facility will be held in a newly formed subsidiary of PNM Resources.
Chuck Eldred, PNM's CFO, said the plant is expected to be neutral to cash flow in 2006 and accretive thereafter.
The company has arranged for bridge financing for the transaction. Permanent financing will come from the issue of debt and equity, structured to maintain the company's investment grade rating.
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