Vermont Yankee’s would-be buyer changes hands

Vermont Yankee 2010
The Vermont Yankee nuclear power plant in Vernon. File photo courtesy of the Nuclear Regulatory Commission

The company that wants to decommission Vermont Yankee has new ownership.

J.F. Lehman & Co., a New York private equity firm, last month acquired a majority interest in the parent company of NorthStar Group Services, which is seeking permission to buy and clean up the idled Vernon nuclear plant.

The deal also is being classified as a “recapitalization” that reportedly pumped more resources into NorthStar as the company seeks to establish itself in the nuclear decommissioning business.

NorthStar Chief Executive Officer Scott State said the corporate governance change “shouldn’t really matter at all” in terms of the details of the Vermont Yankee project. But he said the deal brings economic benefits for all of NorthStar’s ventures.

“Our financial capacity and backing was greatly increased,” State said.

Scott State
NorthStar Group Services CEO Scott State listens during a hearing in Vernon. File photo by Randolph T. Holhut/The Commons
NorthStar wants to buy Vermont Yankee, along with its spent fuel and decommissioning trust fund, by the end of next year. The company has promised to decommission most of the site by the end of 2030, which is decades faster than current owner Entergy had planned.

The proposed change of plant ownership is subject to approval by the federal Nuclear Regulatory Commission and the Vermont Public Utility Commission, formerly the Public Service Board.

Curiosity about NorthStar’s background, expertise and finances has been a key theme in those reviews so far. While some have welcomed the proposed Vermont Yankee sale, others have questioned NorthStar’s ability to deliver on its promises.

So it’s no surprise that NorthStar’s change of ownership comes up several times in the latest discovery documents filed with the state.

Initial filings had shown that NorthStar Group Holdings LLC, the parent of NorthStar Group Services, had been owned by LVI Group Investments and NCM Group Holdings.

Both LVI and NCM are now out of the picture after J.F. Lehman acquired NorthStar on June 12.

J.F. Lehman says it invests in defense, aerospace and maritime companies as well as “companies using the technical capabilities that originate from those sectors.” In an announcement of the NorthStar deal, a Lehman executive said NorthStar “has a sterling reputation in its core markets, providing high quality environmental and technical services” across the United States.

The executive added that NorthStar also has “several near-term growth opportunities that we are excited to partner with the senior management team to pursue.”

The announcement didn’t specify what those opportunities are, but NorthStar is looking to expand much further into the nuclear cleanup business.

The state has characterized NorthStar as “the nation’s largest remediation and demolition company,” and the company has taken apart large fossil fuel plants as well as smaller-scale nuclear reactors used for research.

But the Vermont Yankee project would be NorthStar’s first venture as the primary decommissioning company for a commercial reactor. It also would be the first time a company has purchased a U.S. nuclear plant for the purpose of decommissioning.

In February, NorthStar and AREVA Nuclear Materials – a proposed contractor on the Vermont Yankee job – announced a joint venture called Accelerated Decommissioning Partners. The idea is to combine NorthStar’s demolition expertise and AREVA’s nuclear dismantlement experience into one entity that could tackle more acquisition-and-decommissioning projects like the one proposed at Vermont Yankee.

News reports have said Accelerated Decommissioning Partners is in negotiations to buy two nuclear plants that Entergy plans to close – Pilgrim in Massachusetts and Palisades in Michigan. An AREVA spokesman on Friday said he couldn’t confirm those plant names, saying only that “we are in an assessment process for the decommissioning of two facilities.”

concrete pour
Crews pour concrete earlier this year for a second pad where spent nuclear fuel will be stored at Vermont Yankee. File photo courtesy of Vermont Yankee
Regardless of how many other decommissioning projects may be in the pipeline, NorthStar executives are tying the recent ownership change directly to their nuclear cleanup ambitions.

In testimony filed with the state, NorthStar Vice President and Chief Executive Officer Jeffrey Adix called the sale a “recapitalization transaction.” The Lehman deal is “part of an overall strategy to obtain additional resources and financing access to support the nuclear decommissioning business and other strategic initiatives,” Adix wrote.

He added that the ownership change “brought new capital into the company, de-leveraged its balance sheet and extended the company’s existing senior credit agreement on more favorable terms.”

NorthStar has asserted repeatedly that it has the resources needed to decommission Vermont Yankee.

But in an interview, State said NorthStar executives examined the company’s balance sheet when deciding to further expand into the business of acquiring and decommissioning nuclear plants. The conclusion, he said, was that NorthStar should find a way to recapitalize “to support big projects like that.”

The new ownership structure accomplishes that, State said. In a statement accompanying the Lehman announcement, State said his company “will have the resources, capital structure and operational resources to support our long-term priorities and growth plans.”

There’s an ancillary benefit.

NCM and LVI had been engaged in protracted, complex litigation involving fraud claims. While State says NorthStar’s ownership change wasn’t driven by those lawsuits, it does seem to further insulate the decommissioning company from that dispute.

Lehman “effectively bought out all of the other ownership in the business,” State said.

Now, he added, “there is a dispute between prior owners that doesn’t have any real impact on the company itself.”

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  • bobstannard

    You may recall that Vermont lost out when the plant was sold to Entergy. It turned out that Entergy didn’t buy the plant but Entergy Nuclear Vt Yankee. LLC did. That move was designed to keep the parent company from assuming any risk. It was a shell game that was used against us at the end of the plant’s time.

    We would be wise to look extremely carefully at who (or what) is going to own this plant and to ensure that they have $1.5 billion on hand as that is closer to what it’ll cost to clean this mess up.

  • Pete Novick

    Isn’t this the private equity company owned by former Secretary of the Navy John F. Lehman?

    The signpost up ahead says…..due diligence.