|
|
|
|
|
Retail Supplier Reaches Agreement to Sell Water Heater/HVAC Business, Cuts Dividend
Just Energy Group, Inc. announced an agreement to sell the shares of National Energy Corporation (which operates under the name National Home Services), its water heater and HVAC home services business, to Reliance Comfort Limited Partnership, a Canadian supplier of heating, cooling and water heater rental services.
Just Energy's intent to sell non-core assets such as National Home Services to reduce debt was first reported by EnergyChoiceMatters.com last month
The agreement calls for a selling price of $505 million (all $ Canadian) subject to certain potential adjustments at closing including working capital balances.
Additionally, as conditions of closing, Just Energy must repay all outstanding NHS borrowings (which totaled $273 million at fiscal year end) and payout the remainder interest in a royalty agreement.
The sale is contingent upon approval from the Canadian Competition Bureau and consents of Just Energy lenders.
After the repayment of NHS debt, the buy out of the royalty interest, taxes and transaction costs, Just Energy expects to utilize the net proceeds from the sale to reduce its debt. The total debt reduction following closing is expected to be approximately $400 million.
"NHS was a regional business. Our core electricity and natural gas businesses continue to offer growth across North America and our recently opened UK business shows that market has substantial potential. Accordingly, the potential limits on future NHS growth caused us to believe it was a non-core asset. We are committed to growing our business through innovative energy products that provide our customers with real value," said Just Energy Co-CEOs Deb Merril and James Lewis
For the year ended March 31, 2014, NHS represented 20% of the $210.3 million Base EBITDA generated by Just Energy. In the context of the company's fiscal 2015 guidance range of $220 million to $230 million in Base EBITDA provided with the annual results, approximately 25% was expected from NHS. On a pro forma basis reflecting removal of NHS, this would result in revised fiscal 2015 Base EBITDA guidance to a range of $163 million to $173 million. Accordingly, the sale would result in a payout ratio for the year of greater than 100%.
In light of this, Just Energy has announced that it will reduce its dividend from $0.84 per year ($0.07 per month) to $0.50 per year ($0.125 per quarter). Based on fiscal 2015 guidance and reduced interest expense, this would reflect a pro forma payout ratio of approximately 75% based on the low end of company guidance and the transaction having been in place for the entire year. This moves the dividend significantly toward the company's target range of 60% to 65%. This dividend level is also covered after all expected annual cash outflow including growth capital expenditures and contract initiation costs.
ADVERTISEMENT Search for more retail energy careers: Copyright 2010-
June 5, 2014
Email This Story
Copyright 2010-14 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com
NEW Jobs on RetailEnergyJobs.com:
• NEW! -- Director of Sales and Business Development
• NEW! -- Business Development Manager
• NEW! -- Electricity Analyst -- Retail Supplier
• NEW! -- Analyst I, Electricity Services
• NEW! -- Natural Gas Pipeline Scheduler
• NEW! -- B2B Regional Sales Rep -- Retail Supplier -- NY/NJ/PA
• NEW! -- Account Representative / Account Executive -- Retail Supplier
• NEW! -- Business Development/Sales -- Retail Supplier -- New York
• NEW! -- Senior Pricing & Structure Analyst -- Retail Supplier
• NEW! -- Business Development Manager -- Texas -- DFW
• NEW! -- Account Manager
• NEW! -- Energy Consultant / Analyst
• NEW! -- Vice President of Supply -- Retail Provider -- Houston
• NEW! -- VP/Director of Operations -- Retail Supplier -- Houston
RetailEnergyJobs.com
|
|
|
|