XML 53 R16.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Discontinued Operations and Dispositions
 12 Months Ended
Dec. 31, 2019
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations 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 in the consolidated 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 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.
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 $223 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 statement of operations. In 2019, the Company recorded approximately $42 million in current tax expense primarily related to the gain on sale.
The combination of the disposal of BEC and the commencement of the sale process of substantially all of its portfolio of solar and wind facilities represented a strategic shift for the Company that will have a major effect on operations. Accordingly, beginning in the fourth quarter of 2018, these businesses were classified as discontinued operations and the Contracted Power segment was eliminated. There was no write-down of the carrying amount of the solar and wind facility assets as a result of this change in classification. The assets and liabilities of the solar and wind facilities have been classified as held for sale in the consolidated balance sheets up until the date those assets were disposed. All prior periods have been restated to reflect these changes.
During the first quarter of 2019, the Company also commenced the sale of its majority interest in its renewable power development business that was reported as part of the Company’s Corporate and Other segment in the fourth quarter of 2018. Accordingly, beginning in the first quarter of 2019, the results of this business were classified as discontinued operations and the assets and liabilities of this business have been classified as held for sale in the consolidated balance sheets through the date of sale. The Company did not restate the prior period related to the commencement of the sale process involving its majority interest in a renewable power development business as the disposition was insignificant. A remaining relationship with a third-party developer of renewable power facilities has been reported as a component of Corporate and Other through the expiration of the relationship in July 2019.
The following is a summary of the assets and liabilities held for sale included in the Company’s consolidated balance sheet related to its former Contracted Power segment as of December 31, 2018 ($ 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 statement of operations in 2019, 2018 and 2017 are as follows ($ in millions):
 
Year Ended December 31,
2019
 
2018
 
2017
Product revenue
$
44

 
$
150

 
$
146

Cost of product sales
(7
)
 
(24
)
 
(21
)
Selling, general & administrative expenses
(19
)
 
(25
)
 
(25
)
Depreciation and amortization
—

 
(38
)
 
(60
)
Interest expense, net
(13
)
 
(17
)
 
(23
)
Other income (expense), net(1)
80

 
(14
)
 
1

Net income from discontinued operations before income taxes
85

 
32

 
18

(Provision) benefit for income taxes
(33
)
 
(2
)
 
4

Net income from discontinued operations
52

 
30

 
22

Less: net (loss) income attributable to noncontrolling interests
(3
)
 
(39
)
 
5

Net income from discontinued operations attributable to MIC
$
55

 
$
69

 
$
17

_____________
(1)
Other income (expense), net, includes gain of approximately $80 million from the sale of renewable businesses in 2019 and loss of $17 million from the sale of BEC in 2018.
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 businesses 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.