Macquarie-Led Consortium to Acquire Duquesne Light Holdings for $1.59 Billion; Transaction Enterprise Value of $3.15 Billion
05 July 2006 - 11:00PM
PR Newswire (US)
Duquesne Light's Headquarters to Remain in Pittsburgh, Morgan
O'Brien To Remain CEO PITTSBURGH and NEW YORK, July 5 /PRNewswire/
-- Duquesne Light Holdings (NYSE: DQE, "Duquesne Light", "the
Company") and a consortium led by Macquarie Infrastructure Partners
and Diversified Utility and Energy Trusts (DUET), ("the Macquarie
Consortium"), today announced that they have entered into a
definitive merger agreement. Under the terms of the agreement, the
Macquarie Consortium will acquire all of the outstanding shares of
Duquesne Light Holdings for $20.00 per share in cash, representing
a 21.7% premium based upon Duquesne Light Holdings' closing share
price on July 3, 2006. Duquesne Light Holdings' headquarters will
remain in Pittsburgh and the companies will maintain Duquesne
Light's longstanding commitment to service, reliability and
community involvement. The transaction has been approved by the
Board of Directors of Duquesne Light Holdings and the members of
the Macquarie Consortium. "I am excited about the opportunity that
this merger presents for our customers, shareholders, employees and
the communities we serve," said Morgan K. O'Brien, President and
Chief Executive Officer of Duquesne Light. "Macquarie is the global
infrastructure leader and a dynamic organization with an
outstanding track-record of long-term investment in infrastructure
assets in the U.S. and around the world. We are confident that our
partnership with the Macquarie Consortium will not only help ensure
Duquesne Light's continued success, but also add to the ongoing
success of our region." "Duquesne Light is dedicated to providing
its 587,000 customers in the Pittsburgh region reliable, safe and
efficient electric service," continued Mr. O'Brien. "Over the last
several years, as we have made progress under our back-to-basics
strategy, Duquesne Light has reviewed a broad range of strategic
alternatives. In a consolidating electric utility industry, this
partnership with the Macquarie Consortium gives Duquesne Light the
best opportunity to maintain our role as a committed,
Pittsburgh-based public service provider, a key employer and a
long-time community partner in the region while delivering an
attractive cash premium to our shareholders. This is the right
transaction at the right time with the right partner for Duquesne
Light." Christopher J. Leslie, Chief Executive Officer of Macquarie
Infrastructure Partners, said, "We are pleased to have the
opportunity to team with this well-established, solidly-run,
locally-based utility as Macquarie further expands its
infrastructure interests in the United States. Duquesne Light is a
strong, stable company in a market that has displayed consistent
demand over time. We believe it is an excellent, long-term
investment for our consortium. "We are confident that with Duquesne
Light's talented management team and experienced workforce, the
Company can continue to enhance its financial and operating
performance and build upon its leadership role in the communities
it serves," continued Mr. Leslie. "We are firmly committed to
making the capital expenditures necessary to ensure Duquesne Light
continues to provide the high level of reliability and customer
service for which it is known." Commitment to Duquesne Light's
Headquarters, Management and Employees Upon completion of the
transaction, Duquesne Light Holdings' common stock will cease to be
publicly traded and the Company will be a wholly owned subsidiary
of Castor Holdings LLC, operating as Duquesne Light Holdings.
Duquesne Light Holdings' headquarters will remain in Pittsburgh and
the Company will continue to be subject to regulations of the
Pennsylvania Public Utility Commission (PAPUC) and the Federal
Energy Regulatory Commission (FERC). The Macquarie Consortium plans
to retain Morgan O'Brien in his current role as Chief Executive
Officer. Macquarie will honor the current collective bargaining
agreement in place for Duquesne Light's represented employees, as
well as existing wage and benefit packages for non-represented
employees. "A significant part of our attraction to Duquesne Light
is the high quality of its existing management and employees," said
Mr. Leslie. "We look forward to those same people continuing to
play an essential role at Duquesne Light, and to working closely
with Morgan O'Brien and the other members of the Duquesne Light
management team to continue driving the Company's success."
Commitment to Duquesne Light's Customers A key priority of the
Macquarie Consortium is to ensure that Duquesne Light continues to
provide high levels of service and reliability to customers
throughout Allegheny and Beaver counties. "Duquesne Light has made
a significant commitment to improve the electric infrastructure of
the region, in order to maintain the levels of service and
reliability customers have come to expect," said Mr. O'Brien. "Over
the long- term, Macquarie is committed to funding necessary
maintenance and upgrades to the Company's electric infrastructure."
Commitment to Duquesne Light's Community Involvement Duquesne Light
and the members of the Macquarie Consortium have excellent records
of corporate citizenship and community involvement and the
Macquarie Consortium is committed to continuing Duquesne Light's
ongoing active role in the community. "We view this transaction as
a strong endorsement of Duquesne Light and our more than 125-year
commitment to the Pittsburgh region," said Mr. O'Brien. "We look
forward to keeping our logo on Pittsburgh's skyline and our
employees on the job in their home communities for many years to
come." "We regard Duquesne Light as a community asset," added Mr.
Leslie. "We welcome the opportunity to join with the Duquesne Light
team to become a contributing member of the Pittsburgh community.
We are committed to maintaining the Company's extensive community
support and involvement in Duquesne Light's service territory."
Transaction Terms and Financing Under the terms of the agreement,
the Macquarie Consortium will acquire all of the outstanding common
shares of Duquesne Light Holdings for $20.00 per share in cash. The
transaction has a total equity market value of approximately $1.59
billion, based upon the approximately 79.6 million Duquesne Light
Holdings common shares currently outstanding. The Macquarie
Consortium also will assume $148 million of Duquesne Light
Company's preferred and preference shares on issue as well as
assuming approximately $1.26 billion of Duquesne Light Holdings'
long-term debt (estimated at completion). The offer represents a
premium of 21.7% based upon Duquesne Light Holdings' closing share
price on July 3, 2006 and a premium of 24.0% over Duquesne Light
Holdings' average 30-day closing price ending July 3, 2006. Prior
to the closing of the acquisition, members of the Macquarie
Consortium will also invest approximately $141 million in newly
issued Duquesne Light Holdings equity under a private placement,
priced at $16 per share. Duquesne Light Holdings intends to use the
proceeds to assist the financing of the planned acquisition of a
minority interest in the Keystone and Conemaugh generation
stations, as well as in its ongoing utility infrastructure
investment program. The transaction will be funded at completion
from the following financing sources: -- $954 million in Consortium
cash equity; -- $141 million in newly issued shares of Duquesne
Light Holdings contributed by members of the Consortium; and --
$638 million of term loan bank debt facilities. The Macquarie
Consortium will also assume: -- $148 million of Duquesne Light
Company preferred and preference shares; -- $1.26 billion in
assumed long term debt (estimated at completion). The total
enterprise value of the transaction is $3.15 billion. Further debt
facilities totaling $807 million will be available to the Macquarie
Consortium for the repayment of existing debt and Duquesne Light
Company preference shares (approximately $424 million), capital
expenditure and general corporate purposes (approximately $275
million) plus transaction and other costs. Approvals and Timing The
transaction is subject to customary closing conditions, including
the approval of Duquesne Light's shareholders and various
regulatory agencies, including the Pennsylvania Public Utility
Commission (PAPUC) and the Federal Energy Regulatory Commission
(FERC). The companies anticipate completing the transaction in the
first quarter of 2007. Lehman Brothers has provided a fairness
opinion regarding the transaction to Duquesne Light's Board of
Directors. Macquarie Securities (USA) Inc. acted as financial
advisor to the Macquarie Consortium in connection with the
transaction. Conference Call Duquesne Light Holdings and the
Macquarie Consortium will host a management presentation at 3 p.m.
today, July 5, 2006, in New York. The presentation also will be
available by teleconference and webcast. The presentation can be
accessed by dialing 706-643-0299 beginning 10 minutes prior to the
start of the call. A live, listen-only webcast of the conference
call, together with a copy of this news release, is available on
the Internet at Duquesne Light Holdings' web site:
http://www.duquesnelightholdings.com/. For interested individuals
unable to join the conference call, a replay will be available by
dialing 800-642-1687 and using conference ID 2574619. In addition,
an online archive of the webcast will be available at the Company's
web site: http://www.duquesnelightholdings.com/ . About Duquesne
Light Holdings Duquesne Light Holdings is comprised of an
electric-utility company and several affiliate companies that
complement the core business. Duquesne Light Company, its principal
subsidiary, is a leader in the transmission and distribution of
electric energy, offering superior customer service and reliability
to more than half a million customers in southwestern Pennsylvania.
For more information, please visit Duquesne Light's website:
http://www.duquesnelightholdings.com/ About the Macquarie
Consortium The Macquarie-led Consortium that has entered into a
definitive merger agreement with Duquesne Light is led by Macquarie
Infrastructure Partners and Diversified Utility and Energy Trusts.
The Consortium also includes Industry Funds Management Pty Ltd, an
Australian infrastructure investment fund, and other institutional
investors. Macquarie Infrastructure Partners (MIP), headquartered
in New York, is managed by a member of the Macquarie group
(Macquarie). MIP is a diversified unlisted fund focusing on
infrastructure investments in the United States and Canada. The
Fund's seed investment includes a committed majority equity stake
in Aquarion Company, a regulated New England water utility
operating in Connecticut, Massachusetts, New Hampshire, and New
York State. Diversified Utility and Energy Trusts (DUET), listed on
the Australian Stock Exchange (ASX:DUE), is managed under a 50:50
joint venture between Macquarie Bank Limited and AMP Limited. DUET
has majority ownership in some of Australia's key, regulated energy
utility businesses. These include regional electricity (United
Energy Distributors) and gas (Multinet) distribution businesses in
the state of Victoria as well as Western Australia's Dampier to
Bunbury gas transmission pipeline, that state's key gas
infrastructure asset. DUET also has a minority stake in Western
Australia's largest gas distributor, AlintaGas Networks. For more
information, visit http://www.duet.net.au/. About Macquarie The
Macquarie group is one of the world's largest owners and managers
of infrastructure assets, managing over $25 billion in
infrastructure equity around the world. Important community
infrastructure investments managed by Macquarie include assets in
the energy transmission and distribution, water, transportation,
airport, social infrastructure, and telecommunications sectors.
Macquarie's infrastructure investment philosophy is to: -- invest
strategically for the long-term in quality infrastructure and
related assets; -- take a partnership approach, working with strong
existing management teams to support overall performance; -- bring
specialist international networks and global resources to support
business growth; and -- manage its various assets responsibly and
profitably for the long-term. Macquarie has significant experience
managing numerous regulated energy and utility investments around
the world. In the United States Macquarie's energy and utility
investments to date include: Aquarion Company, a New England water
utility (pending financial close and regulatory approval); The Gas
Company, a Hawaiian full-service gas company; Thermal Chicago,
district energy assets located in Chicago and Las Vegas; Path 15,
an upgrade of Southern California's electricity transmission grid;
and Michigan Electric Transmission Company, an electricity
transmission company in Michigan, among others. The foregoing
contains forward-looking statements, the results of which may
materially differ from those implied due to known and unknown risks
and uncertainties, some of which are discussed below. The ultimate
timing of the merger transaction closing depends on, among other
things, the timing of PAPUC and FERC approvals, which, in turn,
depend on the procedures of those agencies. Timing of the Keystone
and Conemaugh power station acquisitions will depend on the timing
and substance of the regulatory approval. Additional Information
and Where to Find It This communication may be deemed to be
solicitation material in respect of the proposed acquisition of
Duquesne Light by the Macquarie Consortium. In connection with the
proposed acquisition, Duquesne Light Holdings will file relevant
materials with the Securities and Exchange Commission, including a
proxy statement on Schedule 14A. SECURITY HOLDERS OF DUQUESNE LIGHT
ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC,
INCLUDING DUQUESNE LIGHT'S PROXY STATEMENT WHEN IT BECOMES
AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE PROPOSED TRANSACTION. Security holders may obtain a free copy
of the proxy statement, when it becomes available, and other
documents filed by Duquesne Light Holdings at the Securities and
Exchange Commission's web site at http://www.sec.gov/. The proxy
statement and other relevant documents may also be obtained for
free from Duquesne Light Holdings by directing such request to
Holdings at 411 Seventh Avenue, Pittsburgh, PA 15219, Attn:
Corporate Secretary; or by telephone: 800-247-0400 (outside the
Pittsburgh area) or 412-393-6167 (in the Pittsburgh area).
Participants in Solicitation Duquesne Light Holdings and its
directors, executive officers and certain other members of its
management and employees may be deemed to be participants in the
solicitation of proxies from its stockholders in connection with
the proposed transaction. Information regarding the interests of
such directors and executive officers is included in the Company's
Proxy Statement for its 2006 Annual Meeting of Stockholders filed
with the Securities and Exchange Commission on April 28, 2006, and
information concerning all of the Company's participants in the
solicitation will be included in the proxy statement relating to
the proposed transaction when it becomes available. Each of these
documents is, or will be, available free of charge at the
Securities and Exchange Commission's web site at
http://www.sec.gov/ and from Duquesne Light Holdings by directing
such request to the address provided in the section above.
DATASOURCE: Duquesne Light Holdings CONTACT: Financial Community:
Darrin Duda, CFA, +1-412-393-1158, or Media: John Laudenslager,
+1-412-232-6848, both for Duquesne Light; or Alex Doughty,
Corporate Communications of Macquarie, +1-212-231-1710, or Cell,
+1-646-824-1708
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