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Holding Company To Sell Retail Supplier

April 30, 2018

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

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ONEnergy Inc., the parent of retail supplier Sunwave Gas & Power, announced its intention to sell its retail Gas & Power business

"ONEnergy designated its Gas & Power [business] as of December 31, 2017 as being held for sale and as a discontinued operation within the financial statements. As a result of its strategic review, the Board of Directors authorized the Company to approach energy retailing competitors to invite proposals for the sale of its Gas & Power business," ONEnergy said

"Discussions have been held with a number of potential buyers and a formal corporate finance disposal process is in process. Any transaction will be subject to approval by the Company’s shareholders and TSX Venture Exchange (the 'Exchange')," ONEnergy said

"Gas & Power has been operating in a highly competitive environment which has seen its major competitors consolidate, making it difficult for management to derive real growth and profitability from the segment. As a result, management has decided this is a non-core business. The disposal of Gas & Power is due to be completed within the next 12 months," ONEnergy said in an MD&A

"Increased competition in Gas & Power’s primary sales channel created further margin compression and higher customer attrition as selling prices decreased at various times during the year," ONEnergy said in an MD&A

Sunwave Gas & Power operates in several Northeast U.S. markets (Pennsylvania, Connecticut, Massachusetts, and Ohio) and Ontario.

In the Gas & Power division, the loss from discontinued operations amounted to $3.6 million for the year ended December 31, 2017, compared to a loss from discontinued operations of $182,000 for the year ended December 31, 2016 (all $ Canadian)

"Margins were impacted throughout 2017 as a result of a mild winter in the first quarter followed by a mild summer during the third quarter. ISO New England also increased capacity costs significantly during the third quarter," ONEnergy said

Gas & Power’s revenue for the year ended December 31, 2017 was $44 million, compared to $35 million for the year ended December 31, 2016. The increase is a result of higher average number of electricity customers from net new customer additions, particularly in the Pennsylvania market.

Additionally, as previously reported, ONEnergy had, as of December 31, 2015, designated its Home Comfort HVAC and water heater rental business as being held for sale.

On March 9, 2017, ONEnergy entered into a non-binding letter of intent with Cricket Energy Holdings Inc. to sell the rental equipment assets of Home Comfort for approximately $8.3 million and the assumption of Home Comfort’s debt with respect to the related rental equipment assets. The purchase price will be satisfied through cash and a promissory note. In addition, ONEnergy will provide a promissory note to Cricket to satisfy advances Cricket has made to ONEnergy. ONEnergy expects that it will enter into a definitive agreement with Cricket during Q2 2018.

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