SAN DIEGO, Aug. 20, 2017 /PRNewswire/ -- Sempra Energy
(NYSE: SRE) today announced an agreement to acquire Energy Future
Holdings Corp. (Energy Future), the indirect owner of 80 percent of
Oncor Electric Delivery Company, LLC (Oncor), operator of the
largest electric transmission and distribution system in
Texas.
Under the agreement, Sempra Energy will pay approximately
$9.45 billion in cash to acquire
Energy Future and its ownership in Oncor, while taking a major step
forward in resolving Energy Future's long-running bankruptcy case.
The enterprise value of the transaction is approximately
$18.8 billion, including the
assumption of Oncor's debt.
The transaction is expected to be accretive to Sempra Energy's
earnings beginning in 2018.
"Both Sempra Energy and Oncor share more than 100 years of
experience operating utilities that deliver safe, reliable energy
to millions of customers," said Debra L.
Reed, chairman, president and CEO of Sempra Energy. "With
its strong management team and long, distinguished history as
Texas' leading electric provider,
Oncor is an excellent strategic fit for our portfolio of utility
and energy infrastructure businesses. We believe our agreement with
Energy Future will help ensure that Texas utility customers continue to receive
the outstanding electric service they have come to expect from
Oncor and provide stability to Oncor's nearly 4,000 employees."
"For investors, this transaction is expected to enhance our
earnings beginning in 2018 and further expand our regulated
earnings base, while serving as a platform for future growth in the
Texas energy market and U.S. Gulf
Coast region," said Reed.
Sempra Energy expects to fund the $9.45
billion transaction using a combination of its own debt and
equity, third-party equity, and $3
billion of expected investment-grade debt at the reorganized
holding company. Sempra Energy has received financing commitments
from RBC Capital Markets and Morgan Stanley. Sempra Energy expects
its equity ownership after the transaction to be approximately 60
percent of the reorganized holding company.
As a result of the transaction, it is anticipated that Oncor's
underlying financial strength and credit ratings will improve.
Sempra Energy also will maintain the existing independence of
Oncor's board of directors, which has protected Oncor and its
customers during the ongoing Energy Future bankruptcy.
"It is important for Oncor to remain financially strong," Reed
said. "Our proposal will help bring a satisfactory resolution to
Energy Future's bankruptcy case, keep Oncor financially strong, and
protect Oncor customers, while addressing the needs of Texas regulators, creditors and the U.S.
Bankruptcy Court."
As part of the transaction, Sempra Energy has committed to
support Oncor's plan to invest $7.5
billion of capital over a five-year period to expand and
reinforce its transmission and distribution network.
At the completion of the transaction, Bob Shapard, Oncor's CEO, will become executive
chairman of the Oncor board of directors and Allen Nye, currently Oncor's general counsel,
will succeed Shapard as Oncor's CEO. Both are slated to serve on
the Oncor board, which will consist of 13 directors, including
seven independent directors from Texas, two from existing equity holders and
two from the new Sempra Energy-led holding company.
The transaction is subject to customary closing conditions,
including the approval of the Public Utility Commission of
Texas, U.S. Bankruptcy Court of
Delaware, Federal Energy
Regulatory Commission and the U.S. Department of Justice under the
Hart-Scott-Rodino Act.
Sempra Energy expects the transaction to be completed in the
first half of 2018. Lazard and Morgan Stanley are acting as
financial advisors to Sempra Energy and, White & Case LLP, as
legal advisor.
Sempra Energy plans to webcast a conference call for investors,
financial analysts, news media and the general public later this
week, with details to follow.
Headquartered in Dallas, Oncor
is a regulated electric transmission and distribution service
provider that serves 10 million customers across Texas. Using cutting-edge technology, more
than 3,700 employees work to safely maintain reliable electric
delivery service with the largest distribution and transmission
system in Texas; made up of
approximately 122,000 miles of lines and more than 3.4 million
meters across the state.
Sempra Energy includes San Diego Gas & Electric, Southern
California Gas Co., Sempra South American Utilities, Sempra Mexico,
Sempra Renewables and Sempra LNG & Midstream. Sempra LNG &
Midstream currently is developing the Port Arthur LNG
liquefaction-export project on the Gulf Coast of Texas. Sempra Energy formerly owned and
operated 10 power plants in the Texas electric market and currently maintains
a 200-person office in Houston to
support marketing and development activities.
Sempra Energy, based in San Diego, is a Fortune 500 energy
services holding company with 2016 revenues of more than $10
billion. The Sempra Energy companies' more than 16,000 employees
serve approximately 32 million consumers worldwide.
This press release contains statements that are not
historical fact and constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These statements can be identified by words such as
"believes," "expects," "anticipates," "plans," "estimates,"
"projects," "forecasts," "contemplates," "assumes," "depends,"
"should," "could," "would," "will," "confident," "may," "can,"
"potential," "possible," "proposed," "target," "pursue," "outlook,"
"maintain," or similar expressions or discussions of guidance,
strategies, plans, goals, opportunities, projections, initiatives,
objectives or intentions. Forward-looking statements are not
guarantees of performance. They involve risks, uncertainties
and assumptions. Future results may differ materially from those
expressed in the forward-looking statements.
Such forward-looking statements include, but are not limited
to, statements about the anticipated benefits of the proposed
merger involving Sempra Energy and Energy Future, including future
financial or operating results of Sempra Energy or Oncor, Sempra
Energy's, Energy Future's or Oncor's plans, objectives,
expectations or intentions, the expected timing of completion of
the transaction, the anticipated improvement in credit ratings of
Oncor, and other statements that are not historical facts.
Important factors that could cause actual results to differ
materially from those indicated by any such forward-looking
statements include risks and uncertainties relating to: the risk
that Sempra Energy, Energy Future or Oncor may be unable to obtain
bankruptcy court and governmental and regulatory approvals required
for the merger, or that required bankruptcy court and governmental
and regulatory approvals may delay the merger or result in the
imposition of conditions that could cause the parties to abandon
the transaction or be onerous to Sempra; the risk that a condition
to closing of the merger may not be satisfied, including receipt of
a satisfactory supplemental private ruling letter from the Internal
Revenue Service; the expected timing to consummate the proposed
merger; the risk that the businesses will not be integrated
successfully; the risk that the cost savings and any other
synergies from the transaction may not be fully realized or may
take longer to realize than expected; disruption from the
transaction making it more difficult to maintain relationships with
customers, employees or suppliers; and the diversion of management
time and attention to merger-related issues.
Additional factors, among others, that could cause actual
results and future actions to differ materially from those
described in forward-looking statements include: actions and the
timing of actions, including decisions, new regulations, and
issuances of permits and other authorizations by the California
Public Utilities Commission, U.S. Department of Energy, California
Division of Oil, Gas, and Geothermal Resources, Federal Energy
Regulatory Commission, U.S. Environmental Protection Agency,
Pipeline and Hazardous Materials Safety Administration, Los Angeles
County Department of Public Health, states, cities and counties,
and other regulatory and governmental bodies in the United States and other countries in which
we operate; the timing and success of business development efforts
and construction projects, including risks in obtaining or
maintaining permits and other authorizations on a timely basis,
risks in completing construction projects on schedule and on
budget, and risks in obtaining the consent and participation of
partners; the resolution of civil and criminal litigation and
regulatory investigations; deviations from regulatory precedent or
practice that result in a reallocation of benefits or burdens among
shareholders and ratepayers; modifications of settlements; delays
in, or disallowance or denial of, regulatory agency authorizations
to recover costs in rates from customers (including with respect to
regulatory assets associated with the San Onofre Nuclear Generating
Station facility and 2007 wildfires) or regulatory agency approval
for projects required to enhance safety and reliability; the
availability of electric power, natural gas and liquefied natural
gas, and natural gas pipeline and storage capacity, including
disruptions caused by failures in the transmission grid,
moratoriums or limitations on the withdrawal or injection of
natural gas from or into storage facilities, and equipment
failures; changes in energy markets; volatility in commodity
prices; moves to reduce or eliminate reliance on natural gas; the
impact on the value of our investment in natural gas storage and
related assets from low natural gas prices, low volatility of
natural gas prices and the inability to procure favorable long-term
contracts for storage services; risks posed by actions of third
parties who control the operations of our investments, and risks
that our partners or counterparties will be unable or unwilling to
fulfill their contractual commitments; weather conditions,
natural disasters, accidents, equipment failures, computer system
outages, explosions, terrorist attacks and other events that
disrupt our operations, damage our facilities and systems, cause
the release of greenhouse gases, radioactive materials and harmful
emissions, cause wildfires and subject us to third-party liability
for property damage or personal injuries, fines and penalties, some
of which may not be covered by insurance (including costs in excess
of applicable policy limits) or may be disputed by insurers;
cybersecurity threats to the energy grid, storage and pipeline
infrastructure, the information and systems used to operate our
businesses and the confidentiality of our proprietary information
and the personal information of our customers and employees;
capital markets and economic conditions, including the availability
of credit and the liquidity of our investments; fluctuations in
inflation, interest and currency exchange rates and our ability to
effectively hedge the risk of such fluctuations; changes in the tax
code as a result of potential federal tax reform, such as the
elimination of the deduction for interest and non-deductibility of
all, or a portion of, the cost of imported materials, equipment and
commodities; changes in foreign and domestic trade policies and
laws, including border tariffs, revisions to favorable
international trade agreements, and changes that make our exports
less competitive or otherwise restrict our ability to export; the
ability to win competitively bid infrastructure projects against a
number of strong and aggressive competitors; expropriation of
assets by foreign governments and title and other property
disputes; the impact on reliability of San Diego Gas & Electric
Company's (SDG&E) electric transmission and distribution system
due to increased amount and variability of power supply from
renewable energy sources; the impact on competitive customer rates
due to the growth in distributed and local power generation and the
corresponding decrease in demand for power delivered through
SDG&E's electric transmission and distribution system and from
possible departing retail load resulting from customers
transferring to Direct Access and Community Choice Aggregation or
other forms of distributed and local power generation, and the
potential risk of nonrecovery for stranded assets and contractual
obligations; and other uncertainties, some of which may be
difficult to predict and are beyond our control.
These risks and uncertainties are further discussed in the
reports that Sempra Energy has filed with the U.S. Securities and
Exchange Commission. These reports are available through the EDGAR
system free-of-charge on the SEC's
website, www.sec.gov, and on the company's
website at www.sempra.com. Investors should
not rely unduly on any forward-looking statements. These
forward-looking statements speak only as of the date hereof, and
the company undertakes no obligation to update or revise these
forecasts or projections or other forward-looking statements,
whether as a result of new information, future events or
otherwise.
Sempra South American Utilities, Sempra Infrastructure,
Sempra LNG & Midstream, Sempra Renewables, Sempra Mexico and
Infraestructura Energética Nova, S.A.B. de C.V. (IEnova) are not
the same as the California Utilities, San Diego Gas & Electric
Company (SDG&E) or Southern California Gas Company (SoCalGas),
and are not regulated by the California Public Utilities
Commission.
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SOURCE Sempra Energy