South Jersey Industries: SJI Announces Acquisition of Elizabethtown Gas and Elkton Gas from Southern Company Gas
October 16 2017 - 7:31AM
Media & Investor Relations
Contact
Marissa Travaline
609-561-9000 x4227
mtravaline@sjindustries.com
October 16, 2017
SJI Announces
Acquisition of Elizabethtown Gas and Elkton Gas from Southern Company Gas
FOLSOM - South Jersey
Industries (NYSE: SJI) today announced it has entered into
agreements to acquire the assets of New Jersey-based Elizabethtown
Gas and Maryland-based Elkton Gas from Pivotal Utility Holdings,
Inc., a subsidiary of Southern Company Gas.
Upon the successful completion of this
transaction, SJI will become the second largest natural gas
provider in New Jersey, with service to more than 675,000
customers. In addition to Elizabethtown Gas' 288,000 customers, the
company will also add over 6,000 customers in Maryland as part of
the deal.
SJI is acquiring both companies for total
consideration of $1.7 billion, with an effective purchase price of
$1.4 billion after taking into consideration the present value of
tax benefits associated with the transaction. SJI expects the
transaction to be accretive to earnings by 2020, the first full
year of operation post transaction impacts, without synergies.
"The acquisition of Elizabethtown Gas and Elkton
Gas is a great fit for SJI and reinforces our commitment to high
quality, regulated earnings growth," said Michael J. Renna,
President and CEO, South Jersey Industries. "We share the same
business model and are committed to the highest standards of
safety, reliability and environmental stewardship. We look forward
to welcoming the customers and employees of these two utilities
into our SJI family of companies, and to working with New Jersey
and Maryland regulators on a successful transition."
"Importantly, this deal is entirely consistent
with our core strategy and allows us to leverage our combined
scale, talent and culture to accelerate growth and drive
shareholder value while maintaining a strong balance sheet," Renna
continued. "It will also further our commitment to
operational excellence and an outstanding customer experience.
Elizabethtown Gas, Elkton Gas and SJI are deeply tied to the
communities we serve and we look forward to building upon those
relationships."
The transaction is expected to close in mid-2018,
and is subject to approvals by the New Jersey Board of Public
Utilities and the Maryland Public Service Commission, with limited
approvals by the Federal Energy Regulatory Commission and the
Federal Communications Commission. In addition, the transaction is
subject to the requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976.
Strategic Rationale
-
Supports regulated growth
strategy. This transaction supports SJI's strategy of earnings
growth from high-quality, regulated businesses. Utility earnings
contribution will grow to over 80% of total earnings, up from
approximately 70%.
-
Earnings Accretive. The
transaction is expected to be earnings accretive, without
synergies, by 2020.
-
Regulatory and Geographic
Benefits. Familiarity and strong relationships with NJBPU will
facilitate transition of Elizabethtown Gas to a 100% New Jersey
owned company; planned infrastructure investments will benefit key
stakeholders and strengthen our commitment to the state and to the
communities we serve.
-
Preserve Strong Financial
Profile. Post deal capital structure intended to maintain SJI's
existing strong investment grade rating
Transaction
Financing
SJI has a fully committed $2.6 billion bridge financing facility in
place led by BofA Merrill Lynch, TD Securities and Guggenheim
Securities. Permanent financing of the transaction is expected to
be obtained prior to closing by one or more issuances of common
equity, mandatory convertible securities and long term debt. The
timing of these capital markets activities is expected to be
influenced by the regulatory approvals process and subject to
prevailing market conditions.
Analyst and Investor Conference
Call and Webcast
The leadership team of SJI will conduct a webcast and
teleconference to further detail this transaction on Monday,
October 16, 2017 beginning at 8:45 AM ET. Those who wish to
participate in the live webcast can do so by visiting the
"Investors" section of the company's website at
www.sjindustries.com to access the link and materials that will be
available under the Webcasts and Presentations
section of the page. To participate in the conference call, dial
1-800-688-0796 approximately 15 minutes ahead of the scheduled call
time; enter the participant passcode 33849148. No PIN is needed.
International callers may dial 1-617-614-4070; enter the
participant passcode 33849148.
Advisors
Guggenheim Securities is acting as lead financial advisor and BofA
Merrill Lynch is acting as financial advisor to South Jersey
Industries. Gibson, Dunn & Crutcher LLP, is acting as lead
legal advisor to South Jersey Industries.
South Jersey Industries (NYSE: SJI), an energy
services holding company based in Folsom, NJ, delivers energy
solutions to its customers through three primary subsidiaries.
South Jersey Gas delivers safe, reliable, affordable natural gas
and promotes energy efficiency to approximately 381,000 customers
in southern New Jersey. SJI's non-utility businesses within South
Jersey Energy Solutions promote efficiency, clean technology and
renewable energy by providing customized wholesale commodity
marketing and fuel management services; acquiring and marketing
natural gas and electricity for retail customers; and developing,
owning and operating on-site energy production facilities. SJI
Midstream is also an SJI subsidiary and houses the company's
interest in the PennEast Pipeline Project. Visit
www.sjindustries.com for more information about SJI and its
subsidiaries.
###
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: South Jersey Industries via Globenewswire
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