The company intends to use the cash proceeds from the divestiture to fund its long-term growth opportunities, strengthen balance sheet, and focus on its AltaGas' Utilities Platform
Canadian energy infrastructure company AltaGas has signed an agreement to sell its Alaskan Utilities business unit to TriSummit Utilities for a total consideration of $800m.
The sale will include the company’s 100% stake in ENSTAR Natural Gas, the Alaska Pipeline Company, its 65% indirect stake in Cook Inlet Natural Gas Storage Alaska (CINGSA), along with other unregulated assets.
ENSTAR is a large-scale domestic gas distribution company in Alaska, and the Alaska Pipeline Company operates transmission and distribution pipelines for ENSTAR.
CINGSA is a state-regulated commercial natural gas storage facility.
ENSTAR and CINGSA will continue with their operations as individual utilities, with headquarters in Alaska.
As part of the transaction, ENSTAR employees will join TriSummit concurrent with the closing of the acquisition.
AltaGas president and chief executive officer Randy Crawford said: “We believe the valuation reflects the strong long-term performance of the Alaskan platform, which has a long history of delivering safe, reliable and affordable energy to its customers, operating with an industry-leading safety record, and driving positive outcomes for all of its stakeholders.
“We believe that TriSummit will be an excellent steward to the Alaskan Utilities’ stakeholders in the next chapter of its corporate life, along with the continued direction from the highly capable Alaskan senior leadership team and the dedicated employees that will be joining TriSummit post-closing.”
The transaction, which is not subject to any financing conditions, has been approved by the board of directors of both companies.
It is expected to be closed in the first quarter of 2023, subject to certain customary closing conditions, including regulatory approvals from the State.
Upon closing of the sale transaction, AltaGas’ remaining utilities will be concentrated in the Eastern US, including Maryland, Virginia, Michigan and the District of Columbia.
RBC Capital Markets and Scotiabank served as co-financial advisors and Torys is acting as legal advisors to AltaGas on the transaction.
TriSummit president and chief executive officer Jared Green said: “We are excited to announce this transaction and look forward to welcoming the ENSTAR team to TriSummit.
“The dedication and culture of ENSTAR, which is very similar to TriSummit, has provided them with a solid track record and makes this an excellent fit for TriSummit.
“Our top priority is ensuring a smooth transition, maintaining the strong relationships ENSTAR has in its communities, and to fully support ENSTAR as they continue to provide customers with safe, reliable and affordable service.”