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Nuclear plant deal in jeopardy

Some worry credit market will stall spinoff

Associated Press / October 14, 2008
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MONTPELIER - A plan by the owner of Vermont Yankee and the Pilgrim Nuclear Station in Massachusetts to spin off five nuclear reactors under a new company could be in jeopardy because of Wall Street's financial crisis.

Entergy Corp., which is based in New Orleans, wants to fold the plants into Enexus Energy Corp., a new company.

To complete the deal, Enexus, a publicly traded Delaware holding company, must raise $4.5 billion to buy the nuclear plants in New York, Vermont, Michigan, and Massachusetts from Entergy.

Entergy, in turn, would then retain half ownership in Enexus.

In addition to Vermont Yankee and Pilgrim in Plymouth, Mass., the plants are James A. Fitzpatrick station in Oswego County, N.Y.; two units at the Indian Point Energy Center in Westchester County, N.Y.; and Palisades Power Plant in Covert, Mich.

The Vermont Public Service Board has held technical hearings on the spinoff deal, and is expected to render a decision by month's end.

Entergy spokesman Alex Schott said the company plans to forge ahead with the deal this quarter.

"At this time, we're still exploring the different avenues," Schott said.

But some question whether the condition of credit markets will stand in the way.

"With the bond markets in disarray, the ability to consummate the spin under this scenario is questionable," Citigroup analyst Greg Gordon told clients recently in a note.

"There is no doubt that the dramatic market upheavals has caused us some concern, especially with the Enexus proposal to carry a large amount of debt," said Stephen Wark, a spokesman for the Vermont Department of Public Service, which has misgivings about the deal and has yet to endorse it.

Peter Shumlin, state senate president pro tem, said that if the deal goes through, Vermonters "will end up holding the financial bag."

"The only positive outcome from the financial crisis might be that even Entergy can't sell a bill of goods to Wall Street," said Shumlin, a Putney Democrat.

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