This news release constitutes a "designated
news release" for the purposes of Emera's prospectus supplement
dated November 14, 2023, to its short
form base shelf prospectus dated October 3,
2023.
HALIFAX,
NS and BATON ROUGE, La. and
ALBUQUERQUE, N.M.,
Aug. 5,
2024 /PRNewswire/ -- Emera Inc. ("Emera") (TSX:EMA),
an international energy and services company, today announced it
has entered into an agreement to sell its wholly owned operating
company, New Mexico Gas Company, Inc. (NMGC), to Bernhard
Capital Partners ("BCP"), a services and infrastructure-focused
private equity management firm, for an aggregate transaction value
of $1.252 billion USD, including the
assumption of approximately $500 million
USD of debt and subject to customary closing
adjustments.
"This transaction strengthens Emera's balance sheet, supports
our ambitious capital plan and reinforces our strategic decision to
optimize our portfolio and reallocate capital to our highest growth
markets to drive long-term value for our shareholders," says
Scott Balfour, President and CEO,
Emera Inc. "New Mexico Gas is a
strong regulated utility with a customer-focused team. We're proud
of the work we have done together over the past eight years to
drive customer growth and enable more than $800 million USD in strategic capital investments
to expand and maintain a safe, reliable system that will serve New
Mexicans for decades to come."
Emera acquired NMGC as part of its acquisition of the TECO group
of companies in 2016. Under Emera's ownership, NMGC has grown and
remains the largest natural gas utility in New Mexico, serving over 545,000 customers and
safely managing more than 12,000 miles of transmission and
distribution pipelines.
"As an operator of premium electric and gas utilities in
high-growth jurisdictions, we have compelling opportunities ahead
of us, driven by electrification, decarbonization and the need for
increased resilience against climate-related challenges," adds
Balfour. "We will move forward to execute on these opportunities
with a stronger balance sheet, a more focused operating model and a
disciplined capital investment plan."
The purchase price and transaction value respectively represent
approximately 23x last 12 months earnings and 1.42x rate base.
Estimated after-tax net proceeds of approximately $750 million USD will be used to repay holding
company debt and support its investment opportunities in its
regulated utility businesses. The transaction is expected to
improve the company's CFO to debt metrics by 50 bps and reduce its
proportion of holding company leverage by 200 bps.
"This investment directly aligns with Bernhard Capital's
strategy to invest in infrastructure assets and utilities that are
critical to building more resilient communities," says Jeff Jenkins, Founder and Partner at Bernhard
Capital Partners. "We value the strong history of New Mexico Gas
Company and are committed to retaining the invaluable institutional
knowledge of its employees. The leadership team and all employees
will remain in place after closing, and we anticipate creating
approximately 70 new, local jobs. Our priority is ensuring the
continuation of reliable, affordable natural gas service to
customers and communities across the state. This agreement also
reinforces our commitment to fostering economic opportunities and
growth in New Mexico. Albuquerque-based Strategic Management
Solutions (SMSI), another BCP portfolio company, has operated in
New Mexico for 25 years and
generated both positive economic growth and job opportunities
across the state."
BCP has an extensive operation footprint across
the United States. It also
recently announced agreements to acquire multiple leading natural
gas LDCs that serve communities in the Gulf South. To date, BCP has
invested in nearly 70 companies across 20 platforms, including
several utility companies, that collectively employ approximately
20,000 people globally.
The transaction is subject to regulatory approval by the New
Mexico Public Regulation Commission ("NMPRC") and pursuant to
the Hart-Scott-Rodino Antitrust Improvements Act. The transaction
is expected to close in late 2025, but will not close before
September 30, 2025, unless otherwise
authorized by the NMPRC.
J.P. Morgan Securities LLC is acting as exclusive financial
advisor to Emera in this transaction. Davis
Polk & Wardwell LLP is serving as Emera's legal
advisor. Jefferies LLC is serving as the exclusive financial
advisor to Bernhard Capital with Kirkland & Ellis LLP serving
as their legal advisor.
About Emera
Emera is a geographically diverse energy
and services company headquartered in Halifax, Nova Scotia with approximately
$39 billion in assets and 2023
revenues of $7.6 billion. The company
primarily invests in regulated electricity generation and
electricity and gas transmission and distribution, with a strategic
focus on transformation from high carbon to low carbon energy
sources. Emera has investments in Canada, the United
States and the Caribbean.
About Bernhard Capital Partners
Bernhard Capital
Partners is a services and infrastructure-focused private equity
management firm established in 2013. Bernhard Capital Partners has
deployed capital in four funds across several strategies and has
more than $4 billion of gross assets
under management. Bernhard Capital Partners seeks to create
sustainable value by leveraging its experience in acquiring,
operating, and growing services and infrastructure businesses. For
more information, visit www.BernhardCapital.com.
Forward Looking Information
This news release contains
forward‐looking information within the meaning of applicable
securities laws, including statements concerning Bernhard Capital
Partners' acquisition of NMGC and the timing for closing. Undue
reliance should not be placed on this forward-looking information,
which applies only as of the date hereof. By its nature,
forward‐looking information requires Emera to make assumptions and
is subject to inherent risks and uncertainties. These statements
reflect Emera management's current beliefs and are based on
information currently available to Emera management. There is a
risk that predictions, forecasts, conclusions and projections that
constitute forward‐looking information will not prove to be
accurate, that Emera's assumptions may not be correct and that
actual results may differ materially from such forward‐looking
information. Additional detailed information about these
assumptions, risks and uncertainties is included in Emera's
securities regulatory filings, including under the heading
"Business Risks and Risk Management" in Emera's annual Management's
Discussion and Analysis, and under the heading "Principal Risks and
Uncertainties" in the notes to Emera's annual and interim financial
statements, which can be found on SEDAR+ at www.sedarplus.ca.
Emera Media Contact
Dina
Bartolacci Seely
media@emera.com
Bernhard Capital Partners Media Contact
Ed Trissel / Erik
Carlson
Joele Frank, Wilkinson Brimmer
Katcher
(212) 355-4449
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SOURCE Bernhard Capital Partners Management, LP
