Last week TXU Corp., the largest energy provider in Texas — and a pervasive polluter, say environmentalists — agreed to a $45 billion buyout. Not only was it the largest private-equity deal in history, but it also came with qualifications Al Gore could hug: The new owners are canceling the construction of 11 coal-burning power plants that had been planned. Simpson Thacher & Bartlett’s New York office represented Kohlberg Kravis Roberts & Co. and Texas Pacific Group in their acquisition of TXU.
With respect to the green work, Covington & Burling is advising KKR and TPG on environmental, regulatory, and other governmental and public-policy aspects of the transaction. That includes getting the requisite approval from the Federal Energy Regulatory Commission and the Nuclear Regulatory Commission.
That work won’t have to include any uncomfortable introductions, however. Heading up the work to get approval from FERC is D.C.-based partner William Massey, who served as commissioner at FERC for more than 10 years. Handling the NRC proceedings will be Richard Meserve, who’s senior of counsel in the D.C. office and who served as chairman of the NRC from 1999 to 2003. Stuart Eizenstat, who led the U.S. delegation in the negotiation of the Kyoto Protocol on global warming, is coordinating the Covington team. Eizenstat says the firm will also help shepherd the new buyers through briefings in front of the Bush administration and the interested congressional committees, which so far include the House Committee on Energy & Commerce, chaired by Rep. John Dingell (D-Mich.). . . .
TXU wasn’t the only private-equity power play last week. Lawyers from Kirkland & Ellis’ D.C. office represented New York-based Astoria Generating Holdings in a planned $5 billion merger with Boston-based EBG Holdings. The power companies inked an agreement to merge last week under the name US Power Generating. The joint company will have eight power-generation facilities with a total capacity of more than 5,000 megawatts and the ability to supply 20 percent of New York City’s electricity demand and 50 percent of Boston’s.
D.C.-based partner Mitchell Hertz, co-head of Kirkland’s energy practice group, led the team of 20 Kirkland lawyers, along with Chicago-based partner Richard Campbell. Astoria Generating is majority-owned by Madison Dearborn Partners, which has been a Kirkland client since its inception in 1992, according to Hertz. The private-equity firm only acquired its stake in Astoria Generating from Reliant Energy in February of last year, says Hertz, who also lawyered that deal.
The merger, which is subject to approval from FERC and the New York State Public Service Commission, is expected to close by midyear. John Allen led a team of Debevoise & Plimpton lawyers advising EBG on the deal.
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