Entergy Scraps Sale of Louisiana Gas Business

Ticker: ETR · Form: 8-K · Filed: 2024-03-12T00:00:00.000Z

Sentiment: neutral

Topics: divestiture-termination, strategic-decision, gas-utility

Related Tickers: ETR

TL;DR

Entergy just killed the sale of its Louisiana gas biz to ArcLight. Keeping it in-house.

AI Summary

Entergy Corp. announced on March 12, 2024, that it will not proceed with the sale of its New Orleans-based natural gas distribution business, Entergy Louisiana, LLC. The company had previously entered into an agreement to sell this business to an affiliate of ArcLight Capital Partners, LLC, but has now terminated that agreement. Entergy stated that the decision was made after careful consideration of various factors.

Why It Matters

This decision means Entergy will continue to operate its natural gas distribution business in New Orleans, impacting its strategic focus and financial planning.

Risk Assessment

Risk Level: medium — The termination of a sale agreement can indicate underlying issues with the business or the deal terms, potentially affecting future strategic decisions and investor confidence.

Key Players & Entities

FAQ

What was the specific reason Entergy Corp. terminated the sale agreement for Entergy Louisiana, LLC?

The filing states the decision was made after careful consideration of various factors, but does not specify the exact reasons for termination.

Who was the intended buyer of Entergy Louisiana, LLC?

The intended buyer was an affiliate of ArcLight Capital Partners, LLC.

When was the sale agreement terminated?

The termination was announced on March 12, 2024.

What business segment is Entergy Louisiana, LLC a part of?

Entergy Louisiana, LLC is Entergy Corp.'s New Orleans-based natural gas distribution business.

Will Entergy Corp. seek other buyers for Entergy Louisiana, LLC?

The filing does not provide information on whether Entergy Corp. will seek other buyers for the business.

Filing Stats: 1,103 words · 4 min read · ~4 pages · Grade level 13.9 · Accepted 2024-03-12 16:42:21

Key Financial Figures

Filing Documents

06 Material Impairments

Item 2.06 Material Impairments. As more fully-described in "Entergy Arkansas Opportunity Sales Proceeding" in Note 2 in the Entergy Corporation ("Entergy") and Entergy Arkansas, LLC ("Entergy Arkansas") Annual Report on Form 10-K for the year ended December 31, 2023, in September 2020, Entergy Arkansas filed a complaint in the U.S. District Court for the Eastern District of Arkansas challenging the Arkansas Public Service Commission's ("APSC") denial of recovery of $135 million of payments to other Utility operating companies in December 2018 relating to off-system sales of electricity from 2002-2009, as ordered by the Federal Energy Regulatory Commission. The complaint also involved a challenge to the $14 million, plus interest, of related refunds ordered by the APSC and paid by Entergy Arkansas in August 2020. On March 7, 2024, the U.S. District Court for the Eastern District of Arkansas issued a judgment in favor of the APSC and against Entergy Arkansas. Entergy Arkansas plans to appeal the decision. As of December 31, 2023, Entergy Arkansas had a $132 million regulatory asset reflecting the expected recovery of a portion of the costs at issue in the opportunity sales proceeding. As a result of the adverse decision by the U.S. District Court for the Eastern District of Arkansas, on March 12, 2024, Entergy Arkansas concluded that it can no longer support the recognition of this regulatory asset and will record in first quarter 2024 a $132 million ($99 million net-of-tax) charge to earnings. This charge will not result in future cash expenditures.

01. Regulation FD Disclosure

Item 7.01. Regulation FD Disclosure. The charge described in Item 2.06 above will be considered an adjustment and excluded from Entergy's adjusted earnings (non-GAAP) and does not impact Entergy's adjusted earnings per share outlook. In addition, Entergy's credit and operating cash flow outlooks are unaffected by the U.S. District Court for the Eastern District of Arkansas decision. Cautionary Note Regarding Forward-Looking Statements In this current report on Form 8-K, and from time to time, Entergy and Entergy Arkansas make certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, among other things, statements regarding Entergy's current financial and operational outlooks; expected impacts to credit metrics and ratings; and other statements of Entergy's or Entergy Arkansas' plans, beliefs, or expectations included in this report. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this report. Except to the extent required by the federal securities laws, neither Entergy nor Entergy Arkansas undertakes any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Forward-looking statements are subject to a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied in such forward-looking statements, including (a) those factors discussed elsewhere in this Current Report on Form 8-K and in Entergy's and Entergy Arkansas' most recent Annual Reports on Form 10-K, any of their subsequently filed Quarterly Reports on Form 10-Q, and any of their other subsequently filed reports and filings made under the Securities Exchange Act of 1934; (b) uncertainties associated with (1) Entergy's, including Entergy Arkansas', rate proceedings, formula rate

01. Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits (d) Exhibits. Exhibit No. Description 104 Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Entergy Corporation Entergy Arkansas, LLC By: /s/ Marcus V. Brown Marcus V. Brown Executive Vice President and General Counsel Dated: March 12, 2024

View on Read The Filing