United Illuminating Acquires Connecticut Natural Gas
United Illuminating Acquires Connecticut Natural Gas
NEW HAVEN â UIL Holdings Corp has a deal with Iberdrola USA, Inc, to acquire three of its natural gas utilities for $1.30 billion in cash, including net debt of about $411 million, subject to post closing adjustments.
The Associated Press reported that the company is selling its three natural gas utilities in New England to help pay for a $1.4 billion power grid upgrade in Maine that is aimed at assuring reliability and creating capacity for future wind power projects in the state.
According to a release, New Haven-based UIL agreed to buy Spanish energy company Iberdrolaâs Southern Connecticut Gas Company or SCG, Connecticut Natural Gas Corp or CNG, and Berkshire Gas Company. Upon the completion of the deal, UIL is expected to create a diversified energy delivery company with more than doubled customer base of 694,000.
The deal, which was already approved by the Board of Directors of UIL, is expected to be closed in the first quarter of fiscal year 2011.
Meanwhile, Iberdrola intends to use the proceeds from the deal to fund a $1.4 billion infrastructure project in Maine, consisting of the construction and upgrading of approximately 500 miles of transmission lines and five new substations between the United States and Canada.
UILâs Chief Executive Officer James Torgerson said, âThis transaction immediately transforms UIL while adding organic growth opportunities.â
Together, the three natural gas utilities distribute approximately 1.6 billion cubic meters of natural gas per year to nearly 369,000 customers in the states of Connecticut and Massachusetts. The companies have a combined workforce of approximately 800.
UIL, the parent company of United Illuminating Company, said it intends to issue debt and equity to fund the cash portion of the purchase price of the acquisition. Torgerson said that it is an important objective for UIL to maintain the investment grade credit rating for the holding company.
Approximately 130,000 SCG customers reside in the service territory already served by UILâs electric distribution company, the United Illuminating Company.
UIL said the Connecticut Department of Public Utility Control must approve its acquisition of SCG and CNG, while the Massachusetts DPU must approve the purchase of Berkshire.
Notification of the proposed transaction also must be filed with the US Department of Justice and the Federal Trade Commission. Iberdrola said the decision to sell the three natural gas utilities to UIL Holdings falls within its plan of selling nonstrategic assets, the AP report stated.