Energy utility TECO Energy Inc. has decided to totally exit from its international operation in Guatemala. TECO Guatemala has entered into agreements to sell its equity interests in the Alborada and San Jose power stations and related solid fuel handling and port facilities in Guatemala for $227.5 million.
TECO’s Guatemalan assets will be purchased by Sur Electrica Holding Ltd. (“SUR”) and Renewable Energy Investments Guatemala Ltd. (“REIN”)
We consider this divestment to be a strategic move by the company which would enable TECO to re-focus on its domestic operations. The proceeds from the sale will go to repay $25 million of San José Power Station project debt while the balance will be utilized in share repurchases and reduction in debt at the parent company.
The decision to repurchase shares and lower the debt level will have a positive impact on the company’s financials going forward. TECO’s earnings from continued operations for full year 2012 are now expected in the range of $1.10 to $1.20 per share.
We believe the asset divestment programs are aimed at improving TECO’s financials. The company has missed our earnings expectation in the last three quarters mainly due to the ongoing depression in steam coal markets.
The Zacks Consensus Estimates for the third quarter and full year 2012 are presently at 38 cents and $1.19 per share, respectively.
TECO Energy currently retains a short-term Zacks #5 Rank (Strong Sell rating). We rather prefer its Zacks #3 Rank (Hold rating) peer, GenOn Energy, Inc. (GEN - Free Report) .
Based in Tampa, Florida, TECO Energy is involved in the generation, purchase, transmission, distribution, and sale of electric energy in Florida. With a market capitalization of $3.79 billion, the company has 4,290 full time employees.