(Reuters) – FirstEnergy Corp (NYSE:FE), the U.S. utility that gave activist investor Carl Icahn seats on its board this year, is exploring divestitures as an alternative to raising cash by selling stock, according to four people familiar with the matter.
Akron, Ohio-based FirstEnergy is trying to recover from the fallout of accusations it was involved with a $60 million bribery scheme involving financial aid for troubled nuclear power plants in its home state.
The utility replaced its chief executive and let go of employees suspected of being linked to the corruption case, in a bid to assuage investor concerns. Its shares have recovered most of the value they lost when federal prosecutors unveiled the bribery scheme last July.
However, credit rating agencies have warned the episode may continue to affect FirstEnergy’s ability to access bond markets.
FirstEnergy said last month it was seeking alternatives to issuing up to $1.2 billion of stock over 2022 and 2023, to help finance its spending plans.
The firm is working with an investment bank as it considers divesting stakes in some of its subsidiaries as one such alternative, according to the four people.
This includes selling part of Monongahela Power Company, which provides electricity to nearly 400,000 customers in West Virginia, as well as pieces of West Penn Power and Potomac Edison, power companies serving 720,000 customers in Pennsylvania and more than 400,000 people in Maryland and West Virginia respectively.
FirstEnergy could fetch $1.5 billion by selling all three outright, according to one of the sources.
The sources cautioned that no decision has been made and asked not to be identified because the matter is confidential.
FirstEnergy declined to comment.
FirstEnergy would be the latest U.S. utility to raise cash by selling stakes in a subsidiary. In January, Duke Energy Corp (NYSE:DUK) agreed to sell 19.9% of its Indiana operations to Singaporean sovereign wealth fund GIC for $2.05 billion.
FirstEnergy operates 10 regulated electric companies, serving six million customers across six states, according to its website. It agreed to give two board seats to Icahn’s representatives in March.