The leaders of Central Vermont Public Service Corporation (NYSE:
CV) (CVPS) and Gaz Métro Limited Partnership (Gaz Métro) today
announced that a definitive agreement for the sale of CVPS has been
signed. This clears the path for the combination of CVPS and Green
Mountain Power Corporation (GMP), a subsidiary of Gaz Métro, into
one stronger utility for Vermonters. The new agreement provides
significant benefits for customers, community, employees and
shareholders, including $144 million in customer savings over 10
years, a Vermont ownership interest in VELCO, and the establishment
of the Headquarters for Operations and Energy Innovation in
Rutland.
The all-cash transaction will provide CVPS shareholders $35.25
per common share, a 45 percent premium over the closing price of
$24.32 immediately prior to the announcement of the previous
agreement CVPS had reached with Fortis Inc. (Fortis). The CVPS
Board has terminated the agreement with Fortis after deeming
"superior" the offer from Gaz Métro.
"CVPS and GMP will together become a stronger, more efficient
enterprise, built on our deeply held mutual commitment to Vermont,"
GMP President and CEO Mary Powell and CVPS President and CEO Larry
Reilly said. "We believe that this is not only a tremendous
opportunity for CVPS and GMP, but for Vermont's economy at this
critical time. Our combined resources will allow us to continue to
provide competitively priced power, which is necessary for vibrant
communities and a growing economy, and strengthen our commitment to
low-carbon electricity in sync with the environmental ethic of our
state."
"The CVPS Board, first and foremost, had a legal responsibility
to ensure the best possible deal for shareholders, but the board
also wanted to ensure the best possible outcome for our customers,
employees and the communities we serve, Rutland in particular,"
said Bill Sayre, chairman of the CVPS Board of Directors. "GMP
shared that vision, and our agreement serves all of these
constituencies, and ensures CVPS's historic commitment to Rutland
will continue."
One stronger enterprise is good for customers
and Vermont's economy The agreement provides a number of
unique benefits for customers. First, the combination of the two
companies will deliver $144 million in savings for customers over
the next decade -- with even greater savings continuing into the
future. These savings will be achieved through more efficient
distribution of resources, equipment and facilities throughout a
more contiguous service territory, regulatory savings and improved
purchasing leverage with vendors and service providers. Savings
will not be achieved through layoffs -- other than some executive
officers -- but instead through natural retirements and turnover,
which will allow for the smooth integration of both companies'
workforces.
"When we deliver $144 million in savings for families,
businesses and communities that frees up $144 million that can be
reinvested to strengthen Vermont," said Mr. Reilly and Ms. Powell.
"We have an obligation to the public that we operate in a
transparent manner and keep costs as low as possible."
"Also, through the contribution of VELCO stock to a public
trust, this deal presents a dual benefit by helping our neighbors
in need, as well as giving Vermonters an important ownership stake
in the operation of the state's most important transmission asset,"
noted Mr. Reilly and Ms. Powell. The establishment of a public
trust with $1 million in annual income to support a low-income rate
program is made possible by an annual dividend generated through a
contribution of VELCO stock, as well as an annual charitable
contribution from the combined entity. The contribution of VELCO
stock to the public trust means that the new combined entity will
hold less than 50 percent of VELCO voting stock, and control of
VELCO will remain with Vermont entities.
Finally, there are a number of important ways that the
combination of CVPS and GMP will improve reliability and service
for Vermonters. A contiguous service territory and one Operation
Headquarters will streamline storm response to restore power faster
and reduce the overall frequency and duration of outages. Also,
with the benefit of the combined utility's information technology
resources, it will be able to move basic services online more
swiftly, and allow customer service representatives to provide more
personalized service, which will be especially important for the
implementation of the statewide Smart Grid initiative.
New benefits for Rutland The companies
agreed that CVPS's historic commitment to its hometown of Rutland
will remain part of the new utility's corporate culture. To ensure
that commitment, the merged company will locate its Headquarters
for Operations and Energy Innovation in Rutland, and pledge to
build on CVPS's extensive community support efforts.
"When the communities we serve succeed, we succeed," said Ms.
Powell. "In talking with local leaders in recent weeks, I can't
help but be excited about all that is happening in Rutland. Making
sure that the Rutland region maintains a strong utility presence is
important -- but it is as important for us to be a catalyst for job
growth. With the right mix of public and private sector support, I
know that Rutland will be a strong economic engine in our
state."
The Headquarters for Operations and Energy Innovation will be
the combined company's command post for utility operations. On the
energy innovation side, the headquarters will include staff focused
on creative generation solutions, such as distributed generation
and renewable energy projects. The nature of the work will mean
enhancing appropriate staff at the Rutland headquarters.
In addition to locating the Operations Headquarters in Rutland,
the combined company will:
- Commit to no layoffs other than some executive officer
positions due to the consolidation, nor the mandatory relocation of
Rutland employees. Under the combined company's plan for customer
savings, natural retirements and turnovers will be proportional
between CVPS and GMP;
- Work with local leaders to find space in the downtown for a new
facility -- with a strong preference towards rehabilitating vacant
downtown space -- and work on a plan to repurpose existing CVPS
facilities;
- Create a $100,000 "Open for Business" fund, to be administered
by Rutland's Downtown Partnership, to help continue the
revitalization of downtown Rutland by subsidizing rent for several
new businesses for up to two years. CVPS will provide half the
funds immediately, with GMP providing the second half at
closing;
- Create a $100,000 "Green Growth" fund, to be administered by
the Rutland Economic Development Corporation (REDC), to support
specific initiatives to advance green sector jobs and technologies.
CVPS will provide half the funds immediately, with GMP providing
the second half at closing;
- Kick-start a significant new "Solar City" program in Rutland.
Building on CVPS's renewable energy success with CVPS Cow Power™
and other programs, GMP will bring its expertise in solar power to
develop ideas such as a commercial-size solar orchard, small-scale
backyard and rooftop solar, and deployment of other renewable
energy technology. In the coming weeks, a committee of Rutland
region leaders and interested residents will be announced to help
develop these ideas and recommend a direction for the effort.
"GMP has clearly listened to and addressed concerns Rutland
leaders and residents have voiced since their offer was made
public," Rutland Mayor Christopher Louras said. "Ultimately I would
have preferred that CVPS remain an independent company
headquartered here, but through the agreement, significant,
meaningful commitments to Rutland are made, especially related to
local jobs, and therefore, I endorse the merger. Making Rutland the
Headquarters for Operations and Energy Innovation is important to
the region, and the commitments to downtown, REDC, solar
development and ongoing community support have convinced me that
the new merged company will be a leading corporate citizen just as
CVPS has been. GMP's commitment to a plan that any positions
unfilled through natural turnover and retirement will be
proportional, that CVPS will not face disproportional losses, and
that relocations will not be used to reduce local jobs, was also
critical to me and the City of Rutland."
"We are committed to Rutland and the unique and meaningful
community programs CVPS has developed here, including Shareheat,
the Gift-of-Life Marathon, osprey conservation and the company's
corporate giving program," Ms. Powell said.
"We are also mindful that this new statewide utility will be
serving more than 250,000 customers located across Vermont: from
St. Albans to Bennington, Brattleboro to St. Johnsbury, and west
across Route 2 through the capital district back to Chittenden
County -- and most of the towns in between," Ms. Powell noted.
"These communities are important economic drivers for Vermont, so
our services and focus must be statewide."
Maximize employee knowledge and experience
"Both CVPS and GMP are blessed with great employees, and it will be
a privilege to meet and work alongside the CVPS staff," said Ms.
Powell. "As we write the next chapter in the story of these great
companies, we must harness the experience and know-how of all
employees to be the best-of-the-best for our customers."
To achieve the maximum benefits of a combination of GMP and
CVPS, a transition committee, to be co-chaired by Ms. Powell and
Mr. Reilly, will be created. The committee will look at the
operations and business processes of each company in detail,
identify best practices and craft a plan to provide customers of
the combined company with the best service possible. Through this
process, a combined organizational structure will be developed,
which will be staffed by the strongest team of executives and
professional staff available -- regardless of which legacy company
they came from. This substantial effort will begin soon, but will
take months to complete.
"This combination is a unique opportunity that will allow
employees at both companies to provide quality service to our
customers well into the future, while maintaining the important
local bonds that set Vermont utilities apart," added Mr. Reilly and
Ms. Powell. "That's why the CVPS and GMP teams are committed to
working closely together during this transition to ensure that our
customers benefit directly from this combination. We want to be
sure that when the merger is complete we deliver tremendous value
for our customers, exciting opportunities for our employees, and
the same deep commitment to our communities and Vermont."
Shareholder benefits In addition to
customer and community benefits, CVPS shareholders will also
benefit as a result of the agreement between CVPS and Gaz Métro.
Not only is the purchase price of $35.25 per common share, a 45
percent premium over the pre-Memorial Day closing price of $24.32,
CVPS shareholders will retain the right to receive CVPS's regular
quarterly dividend of $0.23 per share until closing.
"Gaz Métro is excited to expand its operations in Vermont
through the combination of CVPS and GMP," said Gaz Métro President
and CEO Sophie Brochu. "We believe that the combination of CVPS and
GMP will prove deeply beneficial to our customers. Both companies
share a vigorous commitment to community and customer service that
is consistent with our corporate approach."
"Our philosophy is to rely on experienced local management and
provide them the capital they need to grow and thrive," added Ms.
Brochu. "Mary Powell will be the president and CEO of the combined
company, and she will assemble a strong local leadership team to
guide the company forward."
The sale is subject to approval of CVPS common shareholders, and
U.S. federal and state regulators, and is expected to be completed
in approximately six to 12 months. Following the completion of the
transaction, CVPS and GMP's combined operations will join Vermont
Gas Systems and Portland Natural Gas Transmission Systems under Gaz
Métro's wholly owned Vermont-based subsidiary, Northern New England
Energy Corporation.
BMO Capital Markets acted as Gaz Métro's financial advisor.
Legal counsel to Gaz Métro was provided by Osler, Hoskin &
Harcourt LLP. Lazard Ltd. advised CVPS. Legal counsel to CVPS was
provided by Sidley Austin LLP, Loeb & Loeb LLP, and Downs
Rachlin Martin PLLC.
About Central Vermont Public Service CVPS,
the largest electric utility in Vermont, serves nearly 160,000
customers in 163 cities and towns across Vermont. CVPS has 530
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.
About Green Mountain Power Green Mountain
Power generates, transmits, distributes and sells electricity in
Vermont and is a leader in wind and solar generation. It serves
more than 96,000 customers. www.greenmountainpower.com.
About Gaz Métro With over $3.6 billion in
assets, Gaz Métro is Quebec's leading natural gas distributor. Its
10,000 kilometer network serves 300 municipalities. Gaz Métro has
operated in this regulated industry since 1957 and is the trusted
energy provider to its customers in Quebec and Vermont, who choose
natural gas for its competitive price, efficiency, comfort and
environmental benefits. Gaz Métro is also present in the
electricity distribution market and is involved in natural gas
transportation and storage, the development of projects such as
wind power, natural gas as fuel for the transportation industry,
and biomethanation. Gaz Métro is committed to the satisfaction of
its customers, partners, employees and the communities it serves.
www.gazmetro.com.
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 and which 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. Some of the factors that could cause actual results to
differ materially from those expressed in such forward-looking
statements include: the occurrence of any event, effect or change
that could give rise to a termination of the definitive agreement
entered into with Gaz Métro; the outcome of any legal proceedings
that may be instituted against CV and others following announcement
of the agreement; the inability to complete the transaction due to
the failure to obtain shareholder approval or the failure to
satisfy other conditions to the completion of the transaction,
including the receipt of certain regulatory approvals; risks that
the proposed transaction disrupts current plans and operations and
creates potential difficulties in employee retention; and the
amount of the costs, fees, expenses and charges related to the
transaction.
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.
CVPS: Steve Costello Office (802) 747-5427 Pager (802) 742-3062
GMP: Dotty Schnure Office (802) 655-8418 Pager (802) 450-2213 Gaz
Métro Jean Charles Robillard Office (514) 719-8201
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