2005 Archives

Progress Energy announces sale of Rail Services subsidiary

RALEIGH, N.C., Feb. 18 /PRNewswire-FirstCall/ -- Progress Energy (NYSE: PGN) has signed a definitive agreement to sell its subsidiary, Progress Rail Services Corp., to subsidiaries of One Equity Partners LLC (OEP), a private equity unit of J.P. Morgan Chase & Co.

The sale price will be $405 million, and the transaction is expected to close within 90 days. Proceeds from the sale will be used to reduce debt.

"While selling Progress Rail has always been an objective for Progress Energy, it was critical for our company and our shareholders to ensure that we received appropriate value for our investment in the business. We accomplished that with this sale," said Chairman and CEO Bob McGehee.

As previously announced, the company will provide 2005 earnings guidance on March 3, 2005. As a result of this transaction, the company anticipates that its earnings will be negatively impacted by approximately 19 cents per share in 2005 and approximately 12 cents per share in subsequent years.

Morgan Stanley served as Progress Energy's financial adviser on the transaction, while Hunton & Williams LLP provided legal counsel to the energy company. J.P. Morgan served as financial adviser to OEP. Legal counsel to OEP was provided by Morgan, Lewis & Bockius LLP.

Progress Rail Services Corp. and its subsidiaries are among North America's largest and most diversified suppliers of products and services to the railroad industry. In addition, the Progress Rail group of affiliates forms one of the largest integrated processors of railroad materials in North America. The group has a number of operating locations in the United States, Canada and Mexico. Progress Rail offers a full range of railcar parts, maintenance-of-way equipment, rail and other track material, railcar repair facilities, railcar scrapping and metal recycling. The company currently employs approximately 3,500 people.

Established in 2001, OEP manages over $2 billion of investments and commitments for J.P. Morgan Chase & Co. OEP is typically a lead investor in management-led buyouts, growth capital financings and corporate divestitures. The firm has offices in New York, Chicago and Frankfurt.

Progress Energy (NYSE: PGN), headquartered in Raleigh, N.C., is a Fortune 250 diversified energy company with more than 24,000 megawatts of generation capacity and $9 billion in annual revenues. The company's holdings include two electric utilities serving approximately 2.9 million customers in North Carolina, South Carolina and Florida. In addition to rail services, Progress Energy's nonregulated operations include competitive generation, energy marketing, natural gas production, fuel extraction and broadband capacity. For more information about Progress Energy, visit the company's Web site at http://www.progress-energy.com .

SOURCE Progress Energy, Inc.

CONTACT: Investor Relations, Bob Drennan, +1-919-546-7474 , or Media
Relations, Garrick Francis, +1-919-546-6189 , both of Progress Energy; or
Media, Brooke Harlow of OEP and J.P. Morgan Chase & Co., +1-212-270-7381 , or
brooke.d.harlow@jpmorgan.com