SPAC One Step Closer to First Acquisition (GGA, GS)

GCA Acquisition (AMEX:GGA) has received anti-trust clearance related to its proposed $1.3 billion purchase of merchant power generator Complete Energy. Complete Energy owns two natural-gas-fired combined-cycle power plants:

• the 1,022-megawatt La Paloma plant near Bakersfield, California,
• and the 837-megawatt Batesville, Mississippi plant.

All of Batesville’s capacity is committed under long-term contracts with J Aron & Company, a subsidiary of Goldman Sachs (NYSE:GS) and a Mississippi utility company. The Bakersfield plant has two tolling agreements for about half its capacity, with the remaining capacity sold on the California merchant power market.

Following completion of the merger, investment funds managed by The TCW Group will own about 19% of Complete Energy; existing GCA shareholders will own about 42%; and the current owners of Complete Energy will own 10%. This is a very good deal for every stakeholder, promising dependable, if not massive, returns, increased access to financing for Complete Energy, and experienced management to run the show.

It appears that shareholder approval is still an outstanding issue, although with this being energy it seems that the approval would be more likely than some other SPAC conversions.

Paul Ausick
June 4, 2008