FirstEnergy to sell Brookfield Super-Core interest in FirstEnergy Transmission

FirstEnergy Corp. announced Thursday it had entered into an agreement with Brookfield (Brookfield) Super-Core Infrastructure Partners to sell an additional 30 percent ownership in its FirstEnergy Transmission, LLC (FET).

The $3.5 billion all-cash deal with strengthen FirstEnergy’s position, the company said, and support its growth and clean energy transition goals. Upon closing, FirstEnergy will remain the majority owner and sole operator, the companies said. FET is the holding company for three of FirstEnergy’s FERC-regulated transmission utility subsidiaries, the largest transmission system in PJM.

“We are pleased to expand our partnership with Brookfield, one of the world’s largest and most respected infrastructure investors,” said John W. Somerhalder, FirstEnergy’s board chair, interim president and chief executive officer. “This agreement efficiently raises capital at an attractive valuation and speaks to the strength and potential of our regulated growth strategies. It positions FirstEnergy to drive value for shareholders as we further optimize our financial position and plan for additional smart grid and clean energy investments in our regulated transmission and distribution businesses.”

In May, FirstEnergy sold 19.9 percent of its non-controlling interest in FET to Brookfield. Once the transaction is closed, FirstEnergy will retain nearly 70 percent of its overall regulated transmission portfolio. During 2022, FirstEnergy reduced FET’s debt by $2.5 billion. Proceeds from this second transaction with Brookfield will accelerate improvements in the company’s credit profile, the company said, as it works toward a funds-from-operations to debt ratio of between 14 and 15 percent.

“This additional investment in FirstEnergy Transmission demonstrates our commitment to building strong partnerships with premier infrastructure asset owners and operators, like FirstEnergy, that share our focus on long-term value creation,” said Eduardo Salgado, Managing Partner in Brookfield’s Infrastructure Group and head of Brookfield Super-Core Infrastructure Partners (BSIP). “This is a very attractive opportunity that firmly aligns with BSIP’s strategy of investing in high quality, resilient businesses that combine growth and defensive characteristics to generate stable cash flows across market cycles.”

The transaction is expected to close in early 2024.