Fortis Inc. Acquisition of CH Energy Group, Inc. Approved by New York State Public Service Commission
June 13 2013 - 1:45PM
Business Wire
Fortis Inc. (“Fortis” or the “Corporation”) (TSX:FTS) and CH
Energy Group, Inc. (“CH Energy Group”) (NYSE:CHG), the
parent company of Central Hudson Gas & Electric Corporation
(“Central Hudson”), announced today that the New York State Public
Service Commission (the “NYSPSC”) has voted to approve the
Corporation’s agreement to acquire CH Energy Group (the
“Acquisition”). Closing of the Acquisition is expected to
occur shortly after receipt, review and acceptance of the
official written order of the NYSPSC.
On February 21, 2012, Fortis and CH Energy Group announced that
Fortis had entered into an agreement to acquire CH Energy
Group for US$65.00 in cash per share, representing an aggregate
purchase price of approximately US$1.5 billion, including the
assumption of approximately US$500 million of debt at closing.
Central Hudson, the main business of CH Energy Group, is a
regulated transmission and distribution utility serving
approximately 300,000 electric and 75,000 natural gas
customers in eight counties of New York State’s Mid-Hudson River
Valley. As at December 31, 2012, Central Hudson accounted for
approximately 93 percent of CH Energy Group’s total assets of
approximately US$1.8 billion. Central Hudson accounted for
approximately 95 percent of CH Energy Group’s net
income in 2012, excluding the impact of acquisition-related
expenses.
“Central Hudson is a well-run utility whose employees, like
those throughout the Fortis federation of utilities, are committed
to serving their customers and their communities,”
says Stan Marshall, President and Chief Executive Officer
of Fortis. “We welcome the employees of Central Hudson to the
Fortis team, and we look forward to their contribution as we
continue to meet our customers’ energy needs safely, reliably and
cost effectively,” he said.
“Our new association with Fortis provides substantial and
lasting benefits for our customers, and the Fortis business
model retains Central Hudson as a standalone company,”
said Steven V. Lant, Chairman of the Board and
President of CH Energy Group. “In our capital intensive
and increasingly consolidating industry, becoming a member of the
Fortis federation of utilities ensures we are able to effectively
serve our customers now and in the future. Central Hudson’s
ability to make required energy infrastructure investments, which
are expected to be more than $100 million annually over the next
five years, is strengthened by being a part of the Fortis
federation.”
The Acquisition provides Central Hudson customers with nearly
US$50 million in financial benefits to moderate future delivery
rates, enhance economic development programs in the areas serviced
by Central Hudson and provide further assistance to low-income
families in the service area. Delivery rates will be frozen for an
additional two years, effectively holding rates constant for the
three-year period from July 2012 through June 2015.
All employees of Central Hudson will retain their jobs for at
least four years and an additional 35 union positions will be
created. Central Hudson will operate as a standalone company, its
current level of community support will be guaranteed for at least
10 years and a new board of directors will have increased
local representation.
About Fortis
Fortis is the largest investor-owned distribution utility in
Canada, serving more than 2 million gas and electricity
customers. Its regulated holdings include electric utilities in
five Canadian provinces and two Caribbean countries and a natural
gas utility in British Columbia. Fortis owns non-regulated
hydroelectric generation assets in Canada, Belize and Upstate
New York. The Corporation also owns hotels and
commercial real estate in Canada.
About CH Energy Group
CH Energy Group is an energy delivery company headquartered in
Poughkeepsie, New York. Its regulated transmission and distribution
subsidiary Central Hudson serves approximately 300,000 electric and
75,000 natural gas customers in eight counties of New York State’s
Mid-Hudson River Valley, delivering natural gas and electricity in
a 2,600-square-mile service territory that extends north from the
suburbs of metropolitan New York City to the Capital District
around Albany. CH Energy Group also operates Central Hudson
Enterprises Corporation, a non-regulated subsidiary composed
primarily of Griffith Energy Services, which
supplies petroleum products and related services to
approximately 56,000 customers in the Mid-Atlantic Region.
Forward-Looking Statements –
Statements included in this new release which are not historical
in nature are intended to be, and are hereby identified as,
“forward-looking statements” for purposes of the safe harbor
provided by Section 21E of the Exchange Act. Forward-looking
statements may be identified by words including “anticipates,”
“intends,” “estimates,” “believes,” “projects,” “expects,” “plans,”
“assumes,” “seeks,” and similar expressions. Forward-looking
statements including, without limitation, those relating to CH
Energy Group’s and Central Hudson’s future business prospects,
revenues, proceeds, working capital, investment valuations,
liquidity, income, and margins, as well as the acquisition by a
subsidiary of Fortis Inc. and the expected timing of the
transaction, are subject to certain risks and uncertainties that
could cause actual results to differ materially from those
indicated in the forward-looking statements, due to several
important factors, including those identified from time to time in
the forward-looking statements. Those factors include, but are not
limited to: the impact of delay or failure to complete the proposed
Fortis transaction on CH Energy Group stock price; deviations from
normal seasonal weather and storm activity; fuel prices; energy
supply and demand; potential future acquisitions; legislative,
regulatory, and competitive developments; interest rates; access to
capital; market risks; electric and natural gas industry
restructuring and cost recovery; the ability to obtain adequate and
timely rate relief; changes in fuel supply or costs including
future market prices for energy, capacity, and ancillary services;
the success of strategies to satisfy electricity, natural gas, fuel
oil, and propane requirements; the outcome of pending litigation
and certain environmental matters, particularly the status of
inactive hazardous waste disposal sites and waste site remediation
requirements; and certain presently unknown or unforeseen factors,
including, but not limited to, acts of terrorism. CH Energy Group
and Central Hudson undertake no obligation to update publicly any
forward-looking statements, whether as a result of new information,
future events, or otherwise. Given these uncertainties, undue
reliance should not be placed on the forward-looking
statements.
Additional Information about the Fortis Transaction and Where
to Find It
In connection with the proposed acquisition of CH Energy Group
by Fortis, CH Energy Group filed a definitive proxy statement with
the SEC on May 9, 2012, and has filed other relevant materials with
the SEC as well. Investors and security holders of CH Energy Group
are urged to read the proxy statement and other relevant materials
filed with the SEC because they contain important information about
the proposed acquisition and related matters. Investors and stock
shareholders may obtain a free copy of the proxy statement when it
becomes available, and other documents filed by CH Energy Group, at
the SEC’s Web site, www.sec.gov. These documents can also be
obtained by investors and stockholders free of charge from CH
Energy Group at CH Energy Group’s website at
www.chenergygroup.com, or by contacting CH Energy Group’s
Shareholder Relations Department at (845) 486-5204.
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