One of the largest energy companies in the United States and an independent power producer have agreed to buy a company in the renewable energy sector for almost $100 million.
NEW YORK, New York – Cinergy Solutions Inc. and U.S. Energy Systems Inc. will buy Zahren Alternative Power Corp. (ZAPCO) in a $98 million transaction. The deal includes $10 million in U.S. Energy shares and $72 million in assumed subsidiary debt. Cinergy Solutions is an affiliate of Cinergy Corp. of Cincinnati, one of the largest diversified energy companies with $10 billion in assets. U.S. Energy Systems is an independent power producer that develops, owns and operates cogen power plants and renewable energy plants. ZAPCO of Connecticut is one of the largest developers of Landfill Gas (LFG) projects in the United States, and currently owns and operates 24 LFG projects which have 40 megawatts of electricity generation capacity. The merger is subject to approval of shareholders of ZAPCO and U.S. Energy Systems, and is expected to close early next year. “Competitive power markets, rising fuel prices and environmental commitments are generating significant interest in renewable energy sources,” explains Steve Harkness, President and COO of Cinergy Solutions. “Customer demand for green power is increasing, and this acquisition expands our renewable energy assets and generates additional growth opportunities.” “ZAPCO has created the standard for developing and producing renewable energy in America today,” adds Goran Mornhed, President and COO of U.S. Energy Systems. “ZAPCO’s mission fits well with our growth strategy and focus on providing clean, efficient energy for our customers everywhere.” “We are excited to join a growth team and an organization with a compatible mission of creating value by providing green power and renewable energy to our customers, thus improving the environment and reducing the negative effects of global warming and pollution,” says Zahren chairman and CEO Bernard Zahren, who will become CEO of US Energy Systems. “Working with our partners at Cinergy Solutions, I see a tremendous opportunity to grow U.S. Energy Systems into one of the leading producers of clean energy.” Last month, Cinergy invested $3.5 million for a stake in U.S. Energy Systems, and will acquire a 46 percent interest in the ZAPCO subsidiary. As a developer and operator of renewable energy facilities, ZAPCO will benefit from emission reduction allowance programs. As the market for greenhouse gas reduction allowances develops, projected reductions from the collection and combustion of methane at ZAPCO’s existing sites will displace the emission of 50 million tons of carbon dioxide into the environment compared with generating plants that combust fossil fuels. ZAPCO recently signed an agreement for the world’s largest cross-border trade of emission reduction credits to a Canadian utility. The credits were generated through ZAPCO’s collection and combustion of methane from its LFG projects, and are equivalent to removing 500,000 automobiles from the road for one full year. ZAPCO has been recognized for its efforts to reduce air emissions by the Environmental Protection Agency (EPA), the Department of Energy, the Solid Waste Association of North America and the Landfill Methane Outreach Program (a division of the EPA).