Takeover Target Westcoast Sells Retail Assets
17:45 EDT Monday, October 22, 2001
CALGARY, Alberta (Reuters) - Westcoast Energy Inc. said on Monday it sold C$385 million ($244 million) of energy retail and services assets to two Canadian buyers as it moved closer to being taken over by Duke Energy Corp.
Pipeline and utility firm Westcoast, target of a $3.5-billion friendly bid by Charlotte, North Carolina-based Duke, said it sold its British Columbia gas utility operations to arch-rival BC Gas Inc. for C$208 million.
In a separate transaction, Epcor Utilities, owned by the city of Edmonton, Alberta, said it was buying Westcoast's Ontario-based Union Energy and Westcoast Capital divisions for C$177 million to gain about one million customers in Canada's most populous province.
Union Energy is best known for its water heater rental business. It also provides heating, ventilation and air conditioning products and service, financing and retail gas.
In September, Duke launched its takeover of Westcoast, a major expansion move that will give it control of British Columbia's main gas pipeline and Ontario's second-biggest gas utility, Union Gas.
BC Gas, known for utility and oil and gas pipeline businesses, will buy Westcoast's Centra Gas British Columbia and Centra Gas Whistler units, which distribute gas on Vancouver Island and the Sunshine coast of the B.C. mainland.
"Centra Gas has excellent growth potential, including the expansion of natural gas service to residential and commercial customers and the opportunity to service gas-fired electricity generating plants on Vancouver Island," BC Gas chief executive John Reid said in a statement.
BC Gas will also pay C$32 million at closing and C$52 million as a deferred payment for the preferred shares of Centra Gas, and assume the firm's C$298 million debt.
It said it would finance the deal with about C$180 million raised through a share issue and C$60 million of new debt.
The transaction, which needs government and regulatory approvals, is expected to be finalized by Jan. 1, 2002.
Meanwhile, municipally owned Epcor said its acquisition of Union Energy would give it a springboard into retail gas and power marketing in Ontario.
The company has already expanded within Alberta -- which deregulated its electricity sector at the start of the year -- to offer power and gas province-wide.
It hopes to continue the strategy in Ontario, which is slated to deregulate its power industry next spring, Epcor's energy division president Brian Vaasjo said.
"The ongoing business of Union Energy is extremely strong and as they build customer base, that just creates further opportunity for us to cross-market," Vaasjo said at a news conference in Toronto. "The opening up of the power market is one piece -- albeit a very important piece. There are a number of other elements of this transaction that bring value."
With the acquisition, Epcor's customers will number about 1.6 million, up from 600,000. Combined revenues are expected to be C$4 billion annually.
The firm, which also operates power plants in Alberta, aims to capture 20 percent of Ontario's retail energy market.
The deal is subject to approval by Canada's Competition Bureau.
Duke's acquisition of Westcoast, the first major purchase of Canadian energy infrastructure by a U.S. firm, is expected to close in the first quarter of 2002.
Westcoast shares closed up 17 Canadian cents at C$42.07 in Toronto on Monday. BC Gas finished up 54 Canadian cents at C$35.64. In New York, Duke rose 23 cents to $39.37. |
