NiSource announced that it has entered into a definitive agreement under which Eversource Energy will acquire Columbia Gas of Massachusetts' business.
Eversource is New England's largest energy delivery company serving approximately 4 million electricity, natural gas, and water customers in Connecticut, Massachusetts and New Hampshire. With Columbia Gas, Eversource will serve 626,000 natural gas customers in Massachusetts alone across more than 60 communities.
With Eversource's resources and facilities located in close proximity to Columbia Gas's customer homes and businesses, NiSource believes Eversource will work collaboratively with stakeholders to incorporate best industry practices and bring additional benefits to customers.
"We believe this transaction will create the right next chapter for the customers and communities that Columbia Gas of Massachusetts serves throughout the state, and provide Columbia Gas employees an opportunity to join a strong organization with deep roots in the region," said Joe Hamrock, President and CEO of NiSource. "Eversource is one of the most respected energy companies in the country with a strong operational track record in the New England area, and we believe they are focused on investing in Columbia Gas of Massachusetts to further improve system operations, including to enhance safety, pipeline integrity and reliability programs. We look forward to working closely with Eversource to ensure a smooth transition.
"Across our network, safety is at the core of everything we do and we have made substantial progress further enhancing this focus, including accelerating the implementation of our Safety Management System. These efforts will continue to be our number one priority."
"Eversource is the right partner for Columbia Gas," said Mark Kempic , President and Chief Operating Officer of Columbia Gas of Massachusetts. "While we have taken significant restoration and safety steps over the past 17 months, we acknowledge that events have led many to lose trust in Columbia Gas. We believe that Eversource's proven track record of investing in its infrastructure, employees and operations to enhance system reliability, combined with its deep familiarity with the region and our operations, will enable Columbia Gas of Massachusetts to be a part of a strong local gas distribution company."
Until the close of the transaction, which is expected to occur by the end of the third quarter 2020, NiSource will continue to remain focused on driving customer safety and service at Columbia Gas, as well as continuing to make ongoing enhancements in all areas of operations going forward.
Transaction Details
Under the terms of the agreement, Eversource will acquire, with certain additions and exceptions, (1) substantially all of the assets of Columbia Gas of Massachusetts, a wholly-owned subsidiary of NiSource, and (2) all of the assets held by any of Columbia Gas of Massachusetts' affiliates that primarily relate to the business of storing, distributing or transporting natural gas to residential, commercial and industrial customers in Massachusetts, as conducted by Columbia Gas of Massachusetts (the "Business"), and Eversource agreed to assume certain liabilities of Columbia Gas of Massachusetts and its affiliates. The liabilities assumed by Eversource do not include, among others, any liabilities for any fines imposed on Columbia Gas of Massachusetts arising out of any criminal proceeding relating to the Greater Lawrence Incident (as defined in the purchase agreement) or liabilities of Columbia Gas of Massachusetts or its affiliates pursuant to civil claims for injury of persons or damage to property to the extent such injury or damage occurs prior to the closing in connection with the Business.
The agreement provides for a purchase price of $1.1 billion in cash, subject to adjustment based on Columbia Gas of Massachusetts' net working capital as of the closing. The purchase price represents a loss compared to the book value of Columbia Gas of Massachusetts.
The transaction is subject to various closing conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the receipt of the approval of the Massachusetts Department of Public Utilities.
Financial Update
Due to the execution of this transaction, NiSource is withdrawing its 2020 net operating earnings per share (non-GAAP) guidance of $1.36 to $1.40. However, NiSource continues to expect to make capital investments of $1.8 to $1.9 billion in 2020. The transaction is expected to enable NiSource to eliminate its previously planned 2020 block equity issuance.
The long-term growth opportunity for the remaining operating companies is unchanged. As a result, following the completion of the transaction, the company expects to initiate 2021 net operating earnings per share guidance and establish a 5 to 7 percent long-term growth rate for both net operating earnings per share and dividend with 2021 as the base year. This expected new long-term guidance is also expected to be extended beyond 2022 to include significant investments related to the company's electric generation strategy.
NiSource continues to remain committed to its current investment-grade credit ratings. The company has investment-grade ratings with Fitch Ratings (BBB), Moody's (Baa2) and Standard & Poor's (BBB+).
Advisors
Lazard is serving as financial advisor and Sidley Austin LLP and WilmerHale are serving as legal counsel to NiSource.
