June 22 (Bloomberg) -- Entergy Corp.’s plans to spin off six nuclear reactors including Indian Point in New York should be able to proceed because credit markets have eased, Chief Executive Officer Wayne Leonard said.

Entergy, the second-biggest U.S. operator of nuclear power plants, is focused on getting approval from New York regulators, Leonard said.

“Now the market is greatly improved,” Leonard said in an interview in Washington on June 19. “We had some investors this week that were making the point, ‘I don’t think you’d have any trouble raising $4.5 billion for these kind of assets.’”

New Orleans-based Entergy announced in November 2007 plans to create a company, Enexus Energy Corp., which would have almost 5,000 megawatts of nuclear generation, including the two- unit Indian Point power plant in New York.

Entergy said in October 2008 that the “unprecedented situation in the financial markets” was affecting timing of the spinoff. The company said then it was trying to complete the deal by the end of 2008.

Before the transaction can be finished, the company must get permission from the New York Public Service Commission to change the ownership of its Indian Point and FitzPatrick reactors in that state.

“We’re kind of bogged down a little bit, have been bogged down, in part because we haven’t really pushed it because the market was not really open,” Leonard said of the New York process. The state’s “position also has been, ‘Why are we working on this when you can’t finance it anyway?’”

Regulators in New York are concerned that the spinoff company would have a credit rating below investment grade, unlike the parent company, said Leonard. That issue focuses on the Indian Point plant, located 40 miles (64 kilometers) north of New York City.

Indian Point

Attorney General Andrew Cuomo is among state officials who have called for Indian Point to be closed, saying it would be too difficult to evacuate all the people in the surrounding area in case of an accident.

Entergy delivers electricity to 2.7 million customers in Arkansas, Louisiana, Mississippi and Texas, according to its Web site. Entergy fell 23 cents to $76.64 at 4 p.m. in New York Stock Exchange composite trading. Entergy is down 38 percent from its 52-week high of $122.84 on June 23, 2008.

Entergy said when it announced the proposed spinoff that the move would help shareholders, who would get shares in the new company and realize the “full value” of the nuclear plants.

The company said in April that it was looking at the “lower end” of its earnings guidance for the year as demand for electricity has softened.

Demand Still Down

Demand will still be down next quarter, Leonard said. “I don’t know that we’ve seen quite the bottom of our service territory yet,” he said. “The rest of this year is going to be tough.”

Entergy has said the new nuclear company would need to borrow about $4 billion to buy the reactors in New York, Vermont, Massachusetts and Michigan.

The new company might not be a “straight” spinoff, he said.

“As we get closer to it, there will be a lot of fine- tuning done to the exact structure, what it looks like,” he said. “It might not be a total spin. It might not be financed exactly in this kind of way, with exactly these kind of straight debt instruments. There may be other things that will add value and be a little more complicated for the market to understand.”

Impatient Investors

The transaction may be completed as early as the end of this year or the beginning of 2010, Leonard said.

“Investors are getting, I think, a little impatient,” he said. “Our board’s getting a little impatient. It’s gone on a long time.”

Leonard said investors should realize that, unlike a pending merger, they already own the assets during the delay. He likened it to a child eyeing his gifts on Christmas Eve.

“It’s yours, you just don’t have it today,” he said. “It’s still yours, it’s got your name on it.”

To contact the reporter on this story: Tina Seeley in Washington at tseeley@bloomberg.net.

Last Updated: June 22, 2009 16:05 EDT