AEP ponders sale of barge subsidiary

MARCH 23, 2015 — Electric utility American Electric Power (NYSE: AEP) says it is has engaged Morgan Stanley & Co. LLC to "explore strategic alternatives for its competitive barge transportation subsidiary, AEP River Operations LLC."

"Explore strategic alternatives" is generally corporate speak for "looking to sell."

AEP says it is "committed to completing its review of potential alternatives for River Operations as promptly as practicable. There are no assurances that any particular alternative will be pursued or that any transaction will occur, or on what terms. The company does not plan to release additional information about the status of the review of alternatives until a definitive agreement is entered into or the process is otherwise completed."

With a fleet of over 2,900 hopper barges, 40 tank barges and over 80 tow boats, AEP River Operations is one of the largest U.S. inland marine transportation companies providing transportation services for bulk commodities, coal and liquids.

It's "coal" that's the key word here. The EPA has proposed regulations to cut emissions from power plants that would sound a death knell for many coal powered plants. The EPA calls its proposals "a common sense plan," opponents call it a "war on coal."

If the regulations come into effect, they are not good news for inland waterway operators that haul a lot of coal.

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