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Crius Energy Acquires Book of 75,000 RCEs
Crius Energy Trust announced that Crius Energy, LLC has entered into an asset purchase agreement with Iron Energy LLC d/b/a Kona Energy, a Texas based energy retailer, to acquire customer contracts and associated assets for approximately 75,000 electricity Residential Customer Equivalents in Illinois, New York, Ohio, and Texas for $7.0 million.
The Acquisition will increase Crius Energy's RCEs by more than 9% to approximately 875,000 RCEs.
Crius Energy expects annual gross margin of between $70 and $90 per RCE and the acquisition is expected to be accretive to distributable cash per unit in 2016. Additionally, Crius Energy expects to enhance the value of the acquisition by cross-selling natural gas products to the customers.
The acquisition is expected to strengthen the company's geographic footprint across four of the 20 states where Crius Energy already operates and adds to the company's growing portfolio of longer-term, fixed rate commercial accounts, Crius said
The portfolio consists of approximately 96% commercial customers and approximately 98% fixed rate contracts, which is expected to increase the percentage of commercial customers and fixed rate contracts in Crius' portfolio to 40% and 75%, respectively.
"This Acquisition is consistent with our growth strategy to acquire assets that diversify the business by strengthening our geographic footprint, increasing our longer-term commercial customer base, and adding to our proportion of fixed rate contracts," said Michael Fallquist, Chief Executive Officer of both the Trust and Crius Energy
The acquisition is expected to close in January 2016, and will be funded by cash and availability under the company's credit facility with Macquarie Energy, LLC. Concurrent with the execution of the acquisition documents and effective upon closing, Macquarie Energy will reduce its energy supply fees under the company's Credit Facility. The reduction will lower interest costs charged to the company by $5.0 million over the next four years.
Customers that will be added through this acquisition will not experience any change to their service and will be seamlessly transitioned to an established Crius Energy brand, based on their location and the type of service they receive, Crius said
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December 14, 2015
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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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