GENERAL INTEREST / Alliance Gas Management makes Acquisition
Alliance Gas Indirectly Acquires 120,000 New Customers
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TSE Symbol: GIF.UN
TORONTO, Dec. 23 /CNW/ - Gas Management Income Fund today reported its
subsidiary, Alliance Gas Management Inc. of Markham, has indirectly acquired
120,000 customer equivalents from Priority Gas Marketing of Toronto. The
transaction is subject to certain conditions to be satisfied on or before
April 15, 1998.
The acquisition, valued at between $10 million and $20 million depending
on certain performance stipulations, will make Alliance Gas the largest
natural gas wholesaler in Canada with almost half a million customer
equivalents.
''This represents a significant acquisition for our business,'' said Paul
Woods, President and Chief Executive Officer of Alliance Gas. ''It provides
economies of scale and gives us the critical mass to negotiate more favourable
gas supply arrangements for our customers and should translate into higher
cash flow for the benefit of our investors.''
Woods said the acquisition was ''done with the objective of adding
customers who have already converted to Agent Billing and Collection (ABC)
service. The final purchase price will depend on the percentage of the
customer base we acquire that has converted to this new direct purchase
standard.''
The transaction also includes a marketing agreement pursuant to which
Priority will sell up to 80,000 additional customer equivalents represented by
ABC contracts to Alliance Gas.
''We believe the customers who are now joining Alliance Gas as part of
this transaction will find we are long-term players whose goal is to deliver a
stable, economical supply of natural gas,'' said Woods. ''While Ontario
residents have considerable choice as a result of deregulation, we are working
hard to make sure we remain the supplier of choice.''
Gas Management Income Fund provides unitholders with regular income and
the potential for growth through its ownership of the common shares, preferred
shares and notes of Alliance Gas Management Inc., now Canada's largest
wholesaler of natural gas to residential and small commercial users.
Established in 1991, Alliance Gas provides more than 490,000 Canadian customer
equivalents (residential and commercial users) with access to stable price
natural gas contracts. Gas Management Income Fund units are traded on The
Toronto Stock Exchange under the symbol GIF.UN. The Fund is eligible for
RRSPs, RRIFs and DPSPs.
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