UIL Holdings Corp To Acquire Philadelphia Gas Works Operations for $1.86B cash; Sees deal immediatly accretive
- Co reached a definitive agreement to acquire assets and certain liabilities of Philadelphia Gas Works (PGW Operations), the nations largest municipally-owned natural gas utility, from the City of Philadelphia for $1.86 billion in cash (the Transaction). The PGW Operations will be acquired on a cash-free and debt-free basis. The Transaction has been unanimously approved by UILs Board of Directors.
- Founded in 1836, Philadelphia Gas Works manages a distribution system of approximately 6,000 miles of gas mains and service pipes supplying approximately 500,000 customers in the city of Philadelphia. The acquisition of PGW Operations will significantly expand the size and scale of UILs natural gas operations and create a more geographically diversified energy delivery utility holding company serving more than 1.2 million total gas and electric customers, including nearly 900,000 gas customers, with proximity to abundant regional gas supply in the Marcellus and Utica shales.
- The Transaction, which upon closing is expected to be immediately accretive to UILs operating and free cash flow, will enable PGW Operations to increase investment in infrastructure and expand its services. The Transaction is expected to be initially earnings neutral and long-term earnings accretive to UIL.
- UIL has secured a $1.9 billion fully committed facility to support the Transaction from Morgan Stanley Senior Funding, Inc. UIL intends to issue long-term debt and equity in amounts consistent with maintaining investment grade credit ratings to permanently fund the Transaction and capitalize a new operating subsidiary at close.
- Under the terms of the agreement, UIL will maintain PGW Operations current base rate structure through 2017.
- Founded in 1836, Philadelphia Gas Works manages a distribution system of approximately 6,000 miles of gas mains and service pipes supplying approximately 500,000 customers in the city of Philadelphia. The acquisition of PGW Operations will significantly expand the size and scale of UILs natural gas operations and create a more geographically diversified energy delivery utility holding company serving more than 1.2 million total gas and electric customers, including nearly 900,000 gas customers, with proximity to abundant regional gas supply in the Marcellus and Utica shales.
- The Transaction, which upon closing is expected to be immediately accretive to UILs operating and free cash flow, will enable PGW Operations to increase investment in infrastructure and expand its services. The Transaction is expected to be initially earnings neutral and long-term earnings accretive to UIL.
- UIL has secured a $1.9 billion fully committed facility to support the Transaction from Morgan Stanley Senior Funding, Inc. UIL intends to issue long-term debt and equity in amounts consistent with maintaining investment grade credit ratings to permanently fund the Transaction and capitalize a new operating subsidiary at close.
- Under the terms of the agreement, UIL will maintain PGW Operations current base rate structure through 2017.