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Discontinued Operations and Dispositions
 9 Months Ended
Sep. 30, 2019
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations and Dispositions Discontinued Operations and Dispositions
The Company accounts for disposals that represent a strategic shift that should have or will have a major effect on operations as discontinued operations. The results of discontinued operations are reported in discontinued operations in the consolidated condensed statement of operations for current and prior periods commencing in the period in which the business or group of businesses meets the criteria of a discontinued operation. These results include any gain or loss recognized on disposal or adjustment of the carrying amount to fair value less cost to sell.
Bayonne Energy Center (BEC) Sale
On October 12, 2018, the Company concluded the sale of BEC and received cash of $657 million, net of the assumption of the outstanding debt balance of $244 million by the buyer and subject to post-closing working capital adjustments, resulting in a loss of approximately $17 million (excluding any transaction costs). During the year ended December 31, 2018, the Company incurred $9 million in professional fees in relation to this transaction, which was included in selling, general and administrative expenses in the consolidated statement of operations. The Company guaranteed its subsidiary’s payment and certain post-closing indemnity obligations under the purchase agreement.
Renewable Businesses Sale
During the fourth quarter of 2018, the Company commenced a sale process involving its portfolios of 142 megawatts (MW) (gross) of solar generation assets and 203 MW (gross) of wind generation assets. In July 2019, the Company completed the sales of its wind power generating portfolio and all but one of the assets in its solar power generating portfolio. The sale of the remaining solar facility closed during September 2019. Upon closing of the transactions involving the portfolios of operating solar and wind assets, MIC deconsolidated $295 million of long-term debt. In July 2019, the Company also completed the sale of its majority interest in a renewable power development business. The Company may be entitled to a deferred purchase price from the sale of its interest in the renewable power development business based on the sale of certain projects by the purchaser in the future.
The aggregate gross proceeds to the Company from the above sales are approximately $275 million, or approximately $210 million net of taxes and transaction related expenses. Upon closing of the transactions, the Company recorded a pre-tax gain of approximately $80 million excluding any transaction costs. The Company incurred approximately $10 million in professional fees in relation to these transactions, which is included in selling, general and administrative expenses in the consolidated condensed statement of operations. For the year ending December 31, 2019, the Company expects to record approximately $55 million in current taxes payable, of which $9 million was paid during September 2019, primarily related to the gain on sale.
The combination of the disposal of BEC and the commencement of the sale process of substantially all of its portfolio of solar and wind facilities represented a strategic shift for the Company that will have a major effect on operations. Accordingly, beginning in the fourth quarter of 2018, these businesses were classified as discontinued operations and the Contracted Power segment was eliminated. There was no write-down of the carrying amount of the solar and wind facility assets as a result of this change in classification. The assets and liabilities of the solar and wind facilities have been classified as held for sale in the consolidated condensed balance sheets up until the date those assets are disposed. All prior periods have been restated to reflect these changes.
During the first quarter of 2019, the Company also commenced the sale of its majority interest in its renewable power development business that was reported as part of the Company’s Corporate and Other segment in the fourth quarter of 2018. Accordingly, beginning in the first quarter of 2019, the results of this business were classified as discontinued operations and the assets and liabilities of this business have been classified as held for sale in the consolidated condensed balance sheets through the date of sale. The Company did not restate the prior period related to the commencement of the sale process involving its majority interest in a renewable power development business as the disposition is insignificant. A remaining relationship with a third-party developer of renewable power facilities has been reported as a component of Corporate and Other through the expiration of the relationship in July 2019.
The following is a summary of the assets and liabilities held for sale included in the Company’s consolidated condensed balance sheets related to its former Contracted Power segment as of December 31, 2018 ($ in millions):
 
December 31, 2018
Assets
 
Cash and cash equivalents
$
3

Restricted cash
14
Accounts receivable, net
9
Other current assets
5
Total current assets
31
Property, equipment, land and leasehold improvements, net
606
Intangible assets, net
9
Other noncurrent assets
2

Total assets
$
648

Liabilities
 
Accounts payable and accrued expenses
$
7

Current portion of long-term debt
20
Other current liabilities
1
Total current liabilities
28
Long term debt, net of current portion
283

Other noncurrent liabilities
6

Total liabilities
$
317

Noncontrolling interests
$
141

Summarized financial information for discontinued operations included in the Company’s consolidated condensed statement of operations for the quarters and nine months ended September 30, 2019 and 2018 are as follows ($ in millions):
 
Quarter Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Product revenue
$
10

 
$
52

 
$
44

 
$
129

Cost of product sales
(1
)
 
(8
)
 
(7
)
 
(20
)
Selling, general & administrative expenses
(11
)
 
(8
)
 
(18
)
 
(22
)
Depreciation and amortization
—

 
(8
)
 
—

 
(38
)
Interest expense, net
(1
)
 
(5
)
 
(13
)
 
(11
)
Other income, net (1)
81

 
3

 
80

 
3

Net income from discontinued operations before income taxes
$
78

 
$
26

 
$
86

 
$
41

Provision for income taxes
(32
)
 
(6
)
 
(32
)
 
(5
)
Net income from discontinued operations
$
46

 
$
20

 
$
54

 
$
36

Less: net loss attributable to noncontrolling interests
—

 
—

 
(3
)
 
(32
)
Net income from discontinued operations attributable to MIC
$
46

 
$
20

 
$
57

 
$
68


_______
(1) Includes approximately $80 million of gain on sale from the renewable businesses described above.
Other Dispositions
The Company reviews strategic options available, including with respect to certain other, smaller businesses in its portfolio in an effort to rationalize its portfolio and enhance the infrastructure characteristics of its businesses. Consistent with this, the Company sold (i) an environmental services business by IMTT in April 2018; (ii) its equity interests in projects involving two properties in May 2018; and (iii) the mechanical contractor business within MIC Hawaii in November 2018. Collectively, the sale of these business is insignificant and do not qualify for discontinued operations.
Prior to the execution of the sale agreement for the mechanical contractor business, the Company wrote-down the value of its investment in this business to reflect its underperformance during the third quarter of 2018. In total, the Company wrote-down approximately $30 million, including fixed assets and intangible assets of approximately $9 million, as well as reserving for certain contract related amounts recorded in other current liabilities and other expenses.