DTE ENERGY TO SELL TRANSMISSION BUSINESS TO
KKR AND TRIMARAN CAPITAL PARTNERS
DETROIT and NEW YORK, December 3, 2002
- DTE Energy (NYSE:DTE) today announced it has
signed a definitive agreement to sell its transmission
business subsidiary, International Transmission
Co. (ITC), to affiliates of Kohlberg Kravis
Roberts & Co. (KKR) and Trimaran Capital
Partners L.L.C. for approximately $610 million
in cash.
"The current regulatory environment requires
us to give up operational control of our transmission
assets," said Anthony F. Earley Jr., DTE
Energy chairman and chief executive officer.
"Because we generate the greatest value
for our shareholders and customers from assets
we own and operate, transmission is no longer
strategic to DTE Energy or a driver of future
growth. In addition, we believe this transaction
further enhances our financial flexibility and
solid balance sheet position."
ITC owns DTE Energy's system of nearly 3,000
miles of high-voltage electric transmission
lines and associated facilities and easements.
These transmission assets were formerly owned
and operated by Detroit Edison, DTE Energy's
electric utility subsidiary.
"We believe the sale of our transmission
assets is consistent with federal regulatory
policy and Michigan law, which promotes the
independent operation of the electric transmission
grid," Earley said. "When transfer
of ownership is completed, Michigan will be
the first state to have virtually all electric
utility customers served by a completely independent
electric transmission system, demonstrating
DTE Energy's continued commitment to electric
restructuring."
Under the terms of the pending agreement, ITC
will seek Federal Energy Regulatory Commission
(FERC) approval to cap the transmission rates
charged to Detroit Edison's customers at the
current levels until Dec. 31, 2005; thereafter,
such rates will be subject to adjustment by
the FERC. Detroit Edison customers should see
no change in service because the electric transmission
system will continue to be operated by the Midwest
Independent System Operator. Under FERC regulations,
Detroit Edison will continue to have fair and
open access to Michigan's electric transmission
network. In addition, KKR and Trimaran intend
to invest in ITC, allowing it to capitalize
on opportunities to best serve its customers.
"FERC and the Michigan Public Service
Commission have shown great foresight in creating
a regulatory structure that supports a more
competitive and efficient U.S. power industry,
which should result in lower electricity bills
for consumers over the long term," said
Scott M. Stuart, a KKR partner. "Based
on the policies they have established, utilities
with forward thinking management, like DTE Energy,
are capitalizing on the opportunity to convert
their non-core transmission assets into cash.
Due to the stability and predictable cash flows
typical of transmission systems and the long-term
investment potential, KKR finds this to be an
attractive sector of the energy market and expects
that ITC will be the first of several transmission
investments."
Dean Kehler, a Trimaran founder and managing
partner, said, "For the past five years,
Trimaran professionals have been pursuing the
goal of building a world-class American transmission
company. With KKR as our partner, ITC as the
first acquisition and substantial additional
capital to invest in the sector, we are well
on our way to achieving this goal. We look forward
to pursuing additional transmission opportunities
as other utilities follow DTE Energy's lead."
The transaction is under review by the Michigan
Public Service Commission and requires the approval
of FERC. The sale is expected to close during
the first quarter of 2003.
KKR is a private investment firm headquartered
in New York; Menlo Park, Calif.; and London.
Since its founding in 1976, KKR has completed
more than 100 transactions involving more than
$100 billion of total financing. For more information,
visit www.kkr.com.
Trimaran Capital Partners is a private asset
management firm, headquartered in New York.
Trimaran has completed 60 investments since
1995 and is investing Trimaran Fund II, which
has committed capital in excess of $1 billion.
For additional information, visit www.trimarancapital.com.
DTE Energy is a Detroit-based diversified energy
company involved in the development and management
of energy-related businesses and services nationwide.
Its largest operating units are Detroit Edison,
an electric utility serving 2.1 million customers
in Southeastern Michigan, and MichCon, a natural
gas utility serving 1.2 million customers in
Michigan. Information about DTE Energy is available
at www.dteenergy.com.
This press release contains
"forward-looking statements" that
are subject to risks and uncertainties that
are discussed in DTE Energy's and Detroit Edison's
reports filed with the Securities and Exchange
Commission.
For Further Information:
DTE Energy Media Relations
Scott L. Simons, (313) 235-8808
Lorie N. Kessler, (313) 235-8807
DTE Energy Investor Relations,
(313) 235-8030
KKR
Ruth Pachman/Josh Pekarsky/Molly Morse
Kekst and Co., (212) 521-4891/4877/4826
Trimaran Capital Partners
Susan Fox Stahl (914) 271-1477
Susan Stahl Communications
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