Bellevue, WA, Nov. 1, 2007 — Puget Energy, the parent company of Puget Sound Energy (PSE), announced that it has entered into a definitive merger agreement with a consortium of long-term infrastructure investors. The consortium is led by Macquarie Infrastructure Partners (MIP), the Canada Pension Plan Investment Board (CPPIB) and British Columbia Investment Management Corp. (bcIMC), and also includes Alberta Investment Management (AIM), Macquarie-FSS Infrastructure Trust (MFIT) and Macquarie Bank Ltd. (together “consortium”).
Under the terms of the agreement, the consortium will acquire all of the outstanding shares of Puget Energy for $30.00 per share in cash, representing over a 25 percent premium based upon Puget Energy’s closing share price on Oct. 25, 2007, the last trading day prior to announcement of the transaction.
The transaction has been approved by the board of directors of Puget Energy and boards of the consortium members. The transaction is expected to close during the second half of 2008, subject to approval by Puget Energy’s shareholders and certain regulatory approvals, including those from the Washington Utilities and Transportation Commission (WUTC) and the Federal Energy Regulatory Commission (FERC).
Following the merger, PSE expects to benefit from access to capital to secure future energy supply and delivery infrastructure to meet growing demand and remain headquartered in Bellevue with the current management team and employees.
Recognizing the needs of PSE’s service area, where the population is expected to grow by 28 percent over the next 20 years, the consortium said it supports PSE’s plans to spend nearly $5 billion over the next five years to meet the anticipated energy supply needs and delivery infrastructure requirements of the utility.
Customer growth and the expiration of large purchased-power contracts in coming years are driving PSE’s need to acquire a large amount of new power supplies. PSE estimates it will need more than 1,300 average-megawatts (aMWs) of new electricity supply by winter 2014-15. This need is expected to increase to more than 2,600 aMW by 2025–roughly equivalent to the power demand of two cities the current size of Seattle.
In connection with the transaction, the consortium has committed to an initial investment of approximately $300 million in 12.5 million shares of newly issued Puget Energy common stock by way of a separate private placement priced at $23.67 per share to fund the company’s ongoing construction program and working capital needs. It is anticipated the private placement will occur prior to the end of 2007. The consortium also committed to securing credit facilities of at least $2.15 billion to help fund PSE’s capital expenditure program and working capital needs and support energy hedging activities upon closing of the transaction.
Upon completion of the merger, Puget Energy common stock will cease to be publicly traded. The company will be owned by the consortium and continue to operate as Puget Energy Inc. Puget Energy’s and PSE’s headquarters will remain in Bellevue under the continued leadership of the current management team, and the utility will continue to be subject to regulation, including that of the WUTC and the FERC.
Under the terms of the merger, PSE’s current employees and management team will remain. The consortium will honor the current collective bargaining agreements in place for PSE’s represented employees with the International Brotherhood of Electric Workers, Local 77, and United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, Local 26 and Local 32, as well as existing wage and primary benefits for all employees.
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