Centrica to sell North American energy business for
$3.63 billion
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[July 24, 2020] By
Nina Chestney
LONDON (Reuters) - Centrica Plc <CNA.L> is to sell its North American
subsidiary Direct Energy for $3.63 billion, sending shares in the
British Gas owner up more than 38%.
The sale to U.S. integrated power company NRG Energy <NRG.N> was
announced along with Centrica's half-year earnings, where the group
reported a profit slump due to the COVID-19 impact and low commodity
prices.
The company plans to use the cash from the sale to reduce net debt and
contribute to its pension schemes. Following the sale, Centrica will
focus on its home markets, the UK and Ireland.
Centrica's shares surged as much as 38.7% early on Friday, heading for
their biggest intraday gain since 1997.
"We had a number of expressions of interest in Direct Energy but it came
down to the right price and the right buyer," Centrica Group chief
executive Chris O'Shea told reporters on a conference call.
Last month, Centrica said it planned to cut around 5,000 jobs, almost
20% of its global workforce, as it deepened restructuring efforts in the
wake of the COVID-19 pandemic.
More than half the job cuts will come from management roles, mostly in
the UK, Centrica said.
The group reported a 14% drop in half-year operating profit to 343
million pounds ($436.3 million) from 399 million a year earlier. This
was due to the pandemic which reduced energy use and weakened commodity
prices.
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A British Gas sign
is seen outside its offices in Staines in southern England, July 31,
2014. REUTERS/Toby Melville
The net impact on pre-tax profit from the pandemic was around 60 million pounds
as the company took mitigating measures such as not paying senior management
bonuses, cost savings and using government job retention schemes.
Centrica gave no full-year financial guidance due to the possibility of
customers delaying or deferring payments because of an uncertain economic
outlook and its implications for unemployment.
It did not declare an interim dividend.
Centrica said it remains committed to exiting exit oil and gas production and
nuclear power generation but has paused planned divestment of its 20% stake in
Britain's nuclear energy fleet and the planned sale of its 69% shareholding in
North Sea oil and gas producer Spirit Energy.
It plans to restart the Spirit Energy process when commodity and financial
markets have settled and is considering options for the sale of its nuclear
stake.
(Reporting by Nina Chestney in London, additional reporting by Shanima A in
Bengaluru; editing by Emelia Sithole-Matarise and Jane Merriman)
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