Energy Choice
                            

Matters

Parent of U.S. Retail Supplier To Be Acquired By Canadian Utility, Retail Supplier Holding. Co.

January 26, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

WGL Holdings, Inc., the parent of retail supplier WGL Energy, and AltaGas Ltd. announced that the Boards of Directors of both companies have unanimously approved a definitive agreement and plan of merger for WGL Holdings to be acquired by AltaGas in an all cash transaction for approximately $6.4 billion in cash.

AltaGas is a North American diversified energy infrastructure company with a focus on natural gas, power and regulated utilities. In addition to various Canadian distribution companies, AltaGas owns SEMCO Energy Gas Company in Michigan

AltaGas also owns a retail supplier offering electricity and natural gas supply in various Canadian provinces.

AltaGas noted that WGL Holdings's retail supply business serves 275,000 customers in Maryland, Virginia, Delaware, Pennsylvania and the District of Columbia

WGL Holdings, "also has a significant existing portfolio of clean power assets that generate stable cash flows and will also be well-positioned to significantly grow in solar, wind, fuel cell, battery storage and other clean technologies, as well as natural gas generation," AltaGas said

Among other things, the transaction, "provides an opportunity to grow AltaGas' contracted power business in other territories and to grow WGL's clean power and energy services business both through geographic expansion as well as through a lengthened tax horizon and stronger combined asset base," AltaGas said

As a result of the transaction, the WGL family of companies and their employees will become part of AltaGas

AltaGas intends to relocate the headquarters of its U.S. power business to WGL’s service region.

Following the closing of the transaction, WGL’s natural gas utility will continue to operate under the Washington Gas brand.

Under the terms of the Transaction, WGL shareholders will receive $88.25 in cash per WGL share, which represents a premium of 27.9% to WGL’s closing share price on November 28, 2016, the day prior to news reports of a potential acquisition of WGL by a third party.

The combined company is expected to have an enterprise value of approximately $17 billion and approximately $3.4 billion in natural gas rate base assets

The transaction is not subject to any financing contingency and AltaGas has a fully committed $4.95 billion bridge financing facility in place with J.P. Morgan Chase Bank, The Toronto-Dominion Bank, and Royal Bank of Canada to finance the transaction. Permanent financing of the transaction is expected to be achieved through an approximate $400 million (Canadian) private placement of subscription receipts to OMERS, the pension plan for Ontario's municipal employees, and a bought subscription receipt offering for gross proceeds of approximately $2.1 billion, launched concurrently with this announcement.

The Boards of Directors of WGL and AltaGas have unanimously approved the transaction, which is expected to close in the second quarter of 2018. Consummation of the transaction is subject to certain closing conditions, including WGL common shareholder approval, and approvals required from the Public Service Commission of the District of Columbia, the Maryland Public Service Commission and the Virginia State Corporation Commission. WGL and AltaGas also plan to submit the transaction for review by the Committee on Foreign Investment in the United States. The agreement will also be subject to Federal Energy Regulatory Commission approval, and expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

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