SAN DIEGO, CA and MOBILE, AL and EnergySouth, Inc. (NASDAQ:
ENSI) today jointly announced a definitive merger agreement for
Sempra Energy to acquire Mobile, Ala.-based EnergySouth for $510
million in cash. Shareholders of EnergySouth will receive $61.50
per share for their EnergySouth stock.
Central to the transaction will be Sempra Energy's acquisition
of the assets of EnergySouth's subsidiary, EnergySouth Midstream,
Inc., including a majority ownership in two large, high-cycle
underground natural gas storage facilities that, when fully
developed, will have capacity of 57 billion cubic feet (Bcf) of
natural gas serving the nation's fastest-growing natural gas
markets.
Sempra Energy also will acquire Mobile Gas Service Corp., an
Alabama natural gas distribution utility owned by EnergySouth, as
part of the transaction. Mobile Gas serves approximately 93,000
customers in southwest Alabama, a region that stands to benefit
from strong economic development within its service territory.
"This acquisition supports our natural gas strategy by expanding
our Gulf Coast operations to serve key markets where gas demand
outpaces the national average," said Donald E. Felsinger, chairman
and chief executive officer of Sempra Energy. "These new assets
complement our existing operations in the region and position us
for future growth."
"EnergySouth has undergone an unprecedented period of growth,"
said Dean Liollio, president and chief executive officer of
EnergySouth, Inc. "This merger is an important step in moving our
company forward, as it creates value for shareholders while
developing energy infrastructure vital to the nation's natural gas
delivery system."
Felsinger said the transaction is expected to be slightly
accretive to earnings in 2009 and contribute up to $0.30 per share
in 2012. Sempra Energy will fund the transaction from operating
cash flow and debt. The company will continue its previously
announced $1.5 billion share-repurchase program.
Upon completion of the acquisition, Sempra Energy's Sempra
Pipelines & Storage unit will operate the EnergySouth, Inc.
assets.
"We believe these high-cycle, well-located storage facilities
will continue to increase in value in volatile natural gas
markets," said George S. Liparidis, president and chief executive
officer of Sempra Pipelines & Storage. "Similar to our existing
Liberty Gas storage assets in Louisiana, EnergySouth's valuable,
high-cycle, salt-dome storage caverns allow maximum flexibility to
inject, withdraw and reinject gas several times a year, providing
customers ample opportunity to hedge against market
volatility."
EnergySouth Midstream, Inc. is the general partner in and
91-percent owner of Bay Gas Storage Company, a facility located 40
miles north of Mobile that provides underground storage and
delivery of natural gas. It is the easternmost storage facility on
the Gulf Coast, with direct service to the growing Florida market.
Currently, Bay Gas has 11.4 Bcf of working natural gas storage
capacity that is fully contracted and operational. An additional 5
Bcf is 92-percent contracted and under construction with a
scheduled first-quarter 2010 in-service date. There are plans to
increase the total Bay Gas capacity to 27 Bcf of underground
salt-dome storage.
EnergySouth Midstream also owns 60 percent of Mississippi Hub,
LLC, a company developing high-cycle, underground salt-dome natural
gas storage in Simpson County, Miss. This facility has planned
direct interconnections to the growing natural gas production areas
in eastern Texas, Oklahoma and Arkansas, as well as the Northeast
market. Currently, Mississippi Hub's first 6 Bcf of storage
capacity is in construction. Long-term commitments are in place for
4 Bcf of this capacity. Operations are slated to commence in the
second quarter of 2010. There are plans to increase the total
Mississippi Hub capacity to 30 Bcf of high-cycle, salt-dome
storage.
The transaction, which is subject to approval by the
shareholders of EnergySouth and regulators, as well as other
customary conditions, is expected to close by year-end. The boards
of directors of Sempra Energy and EnergySouth both have approved
the transaction. EnergySouth's board of directors has unanimously
recommended that EnergySouth's stockholders vote to approve the
transaction.
J.P. Morgan Securities Inc. and Berenson & Company served as
financial advisors to EnergySouth.
Sempra Energy's management will discuss the EnergySouth
acquisition in greater detail at Sempra Energy's upcoming
second-quarter earnings conference call Aug. 7.
EnergySouth, Inc. is a holding company for a group of
energy-related subsidiaries operating in the midstream services and
distribution segments of the natural gas industry.
EnergySouth Midstream and Mobile Gas Service Corporation are the
company's principal businesses.
EnergySouth Midstream is based in Houston, Texas. The company
offers natural gas storage, pipeline transportation, and other
midstream services. EnergySouth Midstream companies include: Bay
Gas Storage Company and Mississippi Hub, natural gas storage
companies located in south Alabama and south Mississippi; Southern
Gas Transmission, which is involved in the intrastate
transportation of natural gas in Alabama, and EnergySouth Services,
a company that creates value for wholesale natural gas customers by
delivering physical natural gas products and risk-management
services.
Mobile Gas Service Corporation, EnergySouth's natural gas
distribution company, purchases, sells, and transports natural gas
through pipeline networks to homes, businesses, and industry in
Mobile, Ala. and surrounding areas.
Sempra Pipelines & Storage operates Liberty Gas Storage, an
underground natural gas storage facility in Calcasieu Parish, La.,
slated to begin storage operations later this summer. At full
capacity, Liberty Gas is expected to provide 17 Bcf of natural gas
storage. There also are plans to increase the total Liberty Gas
capacity to 34 Bcf of high-cycle, salt-dome storage.
Sempra Pipelines & Storage develops, builds and operates
natural gas pipelines and storage facilities in Latin America and
the United States. The company and its affiliates operate and/or
own more than 1,200 miles of pipelines and are developing an
additional 800 miles to help meet North America's growing demand
for energy. It also manages natural gas and electricity
distribution in Argentina, Chile, Mexico and Peru.
Sempra Energy, based in San Diego, is a Fortune 500 energy
services holding company with 2007 revenues of more than $11
billion. The Sempra Energy companies' 13,500 employees serve more
than 29 million consumers worldwide.
This press release contains statements that are not historical
fact and constitute forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. These
statements can be identified by words like "believes," "expects,"
"anticipates," "intends," "plans," "estimates," "may," "would,"
"could," "should," or similar expressions, or discussions of
strategies or plans. Forward looking statements also may include
statements regarding the benefits of the transaction, including
accretion to reported earnings that may be realized from the
transaction and the expected timing for completing the transaction.
Forward-looking statements are not guarantees of performance. They
involve risks, uncertainties and assumptions. Future results may
differ materially from those expressed in the forward-looking
statements. These risks include, but are not limited to, the risk
that the stockholders of EnergySouth do not vote to approve the
transaction, the risk that the transaction is not consummated or
not consummated within the expected timeframe, and the risk that
the expected benefits of the transaction are not realized.
Forward-looking statements are necessarily based upon various
assumptions involving judgments with respect to the future and
other risks, including, among others: local, regional, national and
international economic, competitive, political, legislative and
regulatory conditions and developments; actions by the California
Public Utilities Commission, California State Legislature,
California Department of Water Resources, Federal Energy Regulatory
Commission, Federal Reserve Board, U.K. Financial Services
Authority and other environmental and regulatory bodies in the
United States and other countries; capital market conditions,
inflation rates, interest rates and exchange rates; energy and
trading markets, including the timing and extent of changes in
commodity prices; the availability of natural gas and liquefied
natural gas; weather conditions and conservation efforts; war and
terrorist attacks; business, regulatory, environmental, and legal
decisions and requirements; the status of deregulation of retail
natural gas and electricity delivery; the timing and success of
business development efforts; the resolution of litigation; and
other uncertainties, all of which are difficult to predict and many
of which are beyond the control of the company. These risks and
uncertainties are further discussed in the reports that Sempra
Energy and EnergySouth file with the Securities and Exchange
Commission. These reports are available through the EDGAR system
without charge at the SEC's Web site, www.sec.gov and on each
company's Web site, at www.sempra.com or www.energysouth.com.
Additional Information and Where to Find It
In connection with the proposed transaction, EnergySouth plans
to file with SEC and mail to its stockholders a proxy statement
that will contain information about EnergySouth, the proposed
transaction and related matters. The information in this press
release is not a substitute for the proxy statement, and
STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT CAREFULLY WHEN
IT IS AVAILABLE, AS IT WILL CONTAIN IMPORTANT INFORMATION THAT
STOCKHOLDERS SHOULD CONSIDER BEFORE MAKING A DECISION ABOUT THE
TRANSACTION. In addition to receiving the proxy statement and a
proxy card from EnergySouth by mail, stockholders will also be able
to obtain the proxy statement, as well as other filings containing
information about EnergySouth, without charge, from the SEC's
website (http://www.sec.gov). EnergySouth's stockholders will
receive information at an appropriate time on how to obtain
transaction-related documents for free from EnergySouth. Such
documents are not currently available.
EnergySouth and its directors and certain executive officers may
be deemed to be participants in the solicitation of proxies from
EnergySouth's stockholders in respect of the proposed transaction.
Information about the directors and executive officers of
EnergySouth and their respective interests in EnergySouth by
security holdings or otherwise is set forth in its proxy statement
relating to the 2008 annual meeting of stockholders, which was
filed with the SEC on December 17, 2007. Investors may obtain
additional information regarding the interest of the participants
by reading the proxy statement regarding the acquisition when it
becomes available.
Sempra Pipelines & Storage is not the same company as the
utility, San Diego Gas & Electric (SDG&E) or Southern
California Gas Company (SoCalGas), and Sempra Pipelines &
Storage is not regulated by the California Public Utilities
Commission.
Media Contact: Art Larson Sempra Energy (877) 866-2066
(toll-free U.S.) www.sempra.com Wes Phillips EnergySouth, Inc.
(251) 450-4799 (office) (251) 591-3647 (cell) Financial Contact:
Glen Donovan Sempra Energy (877) 736-7727 (toll-free U.S.) (619)
696-2901 Email Contact
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