Fortis Inc. ("Fortis") (TSX: FTS) and Central Vermont Public
Service ("CVPS") (NYSE: CV) announced today that they have entered
into a definitive agreement for the acquisition by Fortis of all of
the outstanding common shares of CVPS for an aggregate purchase
price of approximately $700 million (U.S.), including the
assumption of approximately $230 million (U.S.) of debt. The
all-cash transaction will provide CVPS shareholders $35.10 per
share, a 44 percent premium over the CVPS common share closing
price of $24.32 on Friday, May 27.
"CVPS is a well-run utility whose operations and operating
philosophy are very similar to those of our Canadian regulated
utilities," said Stan Marshall, President and Chief Executive
Officer, Fortis Inc. "The commitment of CVPS to customers, as
evidenced by the company's stellar customer service record, is very
much aligned with the operating philosophy of Fortis -- to provide
our customers with safe, reliable service in the most
cost-efficient and environmentally responsible manner possible," he
explained.
"At Fortis, we believe that to serve customers well, our
operating companies need to stay close to our customers," said
Marshall. "CVPS will remain autonomous in the Fortis model, with
its own board of directors and its own local management team. CVPS
will remain headquartered in Rutland with Larry Reilly as President
and CEO," he said. "There are no job losses anticipated with this
transaction."
The Fortis Group of Companies has regulated utility companies
operating in five provinces of Canada -- British Columbia, Alberta,
Ontario, Prince Edward Island and Newfoundland -- and three
Caribbean countries. Marshall explains that there are almost 7,000
employees throughout the Fortis Group of Companies; however Fortis'
Head Office, headquartered in St. John's, Newfoundland, has less
than 20 employees. "We are a very decentralized organization," he
said. Reilly said Fortis was selected from several bidders
following a confidential sales process directed by the CVPS
Board.
"Fortis and CVPS share a deep commitment to the environment, our
workers and the people and places that host our businesses," Reilly
said. "While the share offer price by Fortis was a critical
consideration by the CVPS Board, the fact that CVPS would
essentially be preserved as a stand-alone autonomous company within
the Fortis Group was also an important consideration for the CVPS
Board.
"Fortis brings financial strength to CVPS, giving us strong
access to capital markets not available to smaller utilities,"
Reilly said. "And we look forward to sharing best practices with
the other operating companies of Fortis, with the goal of finding
new ways to reduce costs and improve service to our customers."
"This is a great opportunity for CVPS, our customers, employees,
the Rutland region and the state as a whole," commented CVPS
Chairman Bill Sayre. "A partnership with Fortis brings additional
strengths to help us achieve our vision of becoming the best small
utility in America."
"We look forward to welcoming the employees of CVPS to the
Fortis Group and their continuing strong commitment to meeting our
obligation to serve customers," concluded Marshall.
The acquisition is expected to be accretive to earnings per
common share of Fortis in the first full year of ownership.
Under the agreement, CVPS customers and employees will receive
the following direct benefits:
- Approximately $21 million will be provided by Fortis for the
benefit of CVPS customers, in a manner to be determined through the
regulatory approval process;
- CVPS will continue to be managed from the company's
headquarters and maintain its substantial civic presence in Rutland
and across Vermont; and
- CVPS and its customers will benefit from the sharing of best
practices among the Fortis Group of Companies in the areas of
safety, reliability, efficiency and customer service.
The transaction is subject to the approval of CVPS shareholders,
state and U.S. federal regulators and other customary conditions,
and is expected to be completed in approximately six to 12
months.
Lazard advised CVPS. Legal advisors to Fortis were White &
Case LLC and Kenlan Schwiebert Facey & Goss P.C. CVPS was
represented by Loeb & Loeb LLP and Sidley Austin LLP.
Conference Call CVPS will hold a
conference call for members of the investment community on Tuesday
at 10 a.m. (Eastern time). Further details will be issued Tuesday
morning.
Fortis Overview Fortis is the largest
investor-owned distribution utility in Canada, with total assets of
approximately $13 billion and fiscal 2010 revenue totalling
approximately $3.7 billion. Fortis serves approximately 2,100,000
gas and electricity customers. Its regulated holdings include
electric distribution utilities in five Canadian provinces and
three Caribbean countries and a natural gas utility in British
Columbia, Canada. Fortis owns and operates non-regulated generation
assets across Canada and in Belize and Upstate New York. It also
owns hotels and commercial office and retail space primarily in
Atlantic Canada.
Central Vermont Overview CVPS, the largest
electric utility in Vermont, serves nearly 160,000 customers in 163
cities and towns across Vermont. CVPS has about 520 employees. The
company is a three-time winner of the Edison Electric Institute's
national Emergency Recovery Award, and CVPS Cow Power™ won the 2009
U.S. Department of Energy Utility Green Program of the Year Award.
CVPS has been listed by Forbes Magazine as one of the most trusted
companies in America for 60 straight months.
Important Additional Information This communication does not
constitute a solicitation of any vote or approval. This
communication is being made in respect of the proposed merger
transaction involving CVPS. The proposed merger will be submitted
to the stockholders of CVPS for their consideration. In connection
therewith, CVPS will file a preliminary proxy statement and a
definitive proxy statement with the Securities and Exchange
Commission (the "SEC"). CVPS also plans to file other documents
with the SEC regarding the proposed transaction. CVPS URGES
INVESTORS AND SECURITY HOLDERS OF CVPS TO READ THE PROXY STATEMENT
AND ANY OTHER RELEVANT DOCUMENTS THAT WILL BE FILED WITH THE SEC
CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION. The definitive proxy statement will be mailed or
delivered to CVPS's stockholders. In addition, stockholders will be
able to obtain the proxy statement and other relevant documents
filed by CVPS with the SEC free of charge at the SEC's website at
www.sec.gov, or at CVPS's website at www.cvps.com by clicking on
the link "SEC Filings."
Participants in the Solicitation CVPS and its directors and
executive officers may be deemed to be participants in the
solicitation of proxies from the stockholders of CVPS in connection
with the proposed transaction. Information about CVPS and its
directors and executive officers, and their ownership of CVPS's
securities, is set forth in the proxy statement for the annual
meeting of stockholders of CVPS held on May 3, 2011, which was
filed with the SEC on March 24, 2011. These documents can be
obtained free of charge from the sources indicated above. Other
information regarding the participants in the proxy solicitation
and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the proxy
statement relating to the proposed merger and other relevant
materials to be filed with the SEC when they become available.
Forward-Looking Statements Statements contained in this press
release that are not historical fact are forward-looking statements
intended to qualify for the safe-harbors from the liability
established by the Private Securities Litigation Reform Act of
1995. Statements made that are not historical facts are
forward-looking and, accordingly, involve estimates, assumptions,
risks and uncertainties that could cause actual results or outcomes
to differ materially from those expressed in the forward-looking
statements. Actual results will depend, among other things, upon
the actions of regulators, performance of the Vermont Yankee
nuclear power plant, effects of and changes in weather and economic
conditions, volatility in wholesale electric markets, volatility in
the financial markets, and our ability to maintain our current
credit ratings. These and other risk factors are detailed in CV's
Securities and Exchange Commission filings. CV cannot predict the
outcome of any of these matters; accordingly, there can be no
assurance that such indicated results will be realized. Readers are
cautioned not to place undue reliance on these forward-looking
statements that speak only as of the date of this press release. CV
does not undertake any obligation to publicly release any revision
to these forward-looking statements to reflect events or
circumstances after the date of this press release.
Contact: CVPS Steve Costello (802) 747-5427 Pager (802)
742-3062
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