Man buys unfinished nuclear power station for $111m

A canny property developer in the US has made history by becoming the first individual ever to buy a nuclear power station.

The well-connected Franklin J. Haney, whose $10bn property portfolio includes government offices and a stake in a major toll road, picked up the power station in Hollywood, Alabama at an auction this week for just $111m.

Claiming a reputation for "innovative financing" and "imaginative acquisitions", the Chattanooga, Tennessee-based mogul will need to bring all his deal-making talents to bear on his new asset because construction on the Bellefonte plant was abandoned in 1988, and Haney says he will find another $13bn to get it completed.

After outbidding one rival in the 14 November auction, 75-year-old Haney said the rejuvenated plant would "transform communities" hit by coal-plant closures in Alabama and Tennessee.

Completing the plant will employ up to 4,000 people, Haney said, while operating it would create 2,000 "permanent, high paying jobs".

Along with the incomplete 2.6GW power station, which has for years been ransacked for spare parts, Haney will get 1,400 acres of property on the Guntersville Reservoir.

To hold him to his promises regarding the site, the seller, state utility Tennessee Valley Authority (TVA), stipulated that Haney must invest at least $25m on the property within five years of closing the deal, and he has two years to close the deal.

55% complete

TVA starting building Bellefonte in 1975, but halted in 1988 on forecasts of insufficient demand for the electricity it would generate. It has been estimated that TVA spent $5bn on the station over the years.

It contains two partially built Babcock & Wilcox pressurised water reactors. When TVA halted construction in 1988, reactor 1 was approximately 90% compete, and reactor 2 was approximately 58% complete. But after years of removing assets from the units, and following subsequent inspections, the reactors were deemed 55% and 35% complete, respectively, in 2009.

Haney has a history with the plant. In 2001 he offered to finance the completion of Bellefonte under a lease-back arrangement, but TVA did not go for the deal.

TVA started the auction process in May, when it set a minimum bid level of $36.4m based on an appraisal. Bidders had to have an end-use and investment plan to show they could promote economic investment in the area.

After the site was marketed to 500 potential buyers, 11 went as far as signing confidentiality agreements for further discussions, and only three completed Letters of Intent.

One of those, Nevada-based Phoenix Energy, made an early offer of $38m for the plant, which it proposed to use not for nuclear but rather for a novel form of generation using electromagnetic induction energy fields. But Phoenix did not show up for the auction.

Slam of the gavel

On the day, Haney faced just one rival, Jackson Holdings of Alabama LLC, a group of investors who planned to use equipment from Bellefonte for a nuclear plant in India, reports local newspaper the Times Free Press.

One eye-witness said the bidding escalated to more than $100m "in a matter of minutes", but Jackson Holdings would go no further than $110m, and the gavel slammed down on the $111m bid made by Haney’s firm, Nuclear Development LLC.

As well as the power station and the land, Haney gets switchyards, office buildings, warehouses, cooling towers, water pumping stations and railroad spurs.

Both seller and buyer declared themselves happy with the result. Joe Ritch, executive director of the TVA board of directors, said: "Glad we were able to finally put it in the hands of someone going forward."

Haney promised that communities would be transformed.

"Today marks the first step of an exciting new journey for the people of Alabama and Tennessee," he said in a statement. "The Bellefonte Nuclear Station will help transform communities across the region – many of which have been hit hard by the forced closure of coal power plants over the last decade. This project will bring new life to the region by creating thousands of jobs while providing assured access to reliable, affordable, zero-emission energy."

Image: The Bellefonte site: TVA starting building it in 1975, but halted in 1988 on forecasts of insufficient demand for the electricity it would generate (TVA)