Sunday, April 11, 2021

Centrica, UK: British Energy Group Centrica sells US Assets For $3.6 Billion

British domestic energy provider Centrica, fresh from slashing jobs on coronavirus fallout, revealed Friday the sale of its US operations for $3.6 billion (3.1 billion euros), sending its shares soaring.

Centrica, which owns top UK energy supplier British Gas, said in a statement that it has agreed to sell its North American business Direct Energy to US company NRG Energy.

The group, which entered the North American market in 2000, added that it regarded NRG’s offer as an “attractive price” for a divestment that would complement the drastic restructuring that it had unveiled last month.

The announcement sent Centrica’s share price soaring 16 percent to 46.83 pence, bucking London’s FTSE 100 index which was down 1.1 percent near the half-way stage.

“The transaction enables Centrica to simplify further its business, which alongside the significant restructuring that is now underway will create a simpler, leaner company, focused on its core markets of the UK and Ireland,” the group said.

“It will also increase the long term strength of the group’s balance sheet, with net cash proceeds intended to be used to reduce net debt significantly and to make a material contribution to the group’s defined benefit pension schemes. In addition, it will result in a more stable financial profile for the group.”

The deal, which remains subject to shareholder and regulatory approvals, is expected to complete in the fourth quarter of 2020.

Centrica had already announced in June that it will axe 5,000 jobs this year, shedding almost one-fifth of its workforce, as it responds to the coronavirus pandemic fallout and intense competition.

The company has said that a need for drastic restructuring — centred on axing leadership, management and corporate staff — had been accelerated by the slump in energy demand triggered by the COVID-19 outbreak. The group employs more than 26,000 staff worldwide.

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