16th Feb 2006 11:41
National Grid PLC16 February 2006 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO CANADA, AUSTRALIA OR JAPAN 16 February 2006 NATIONAL GRID ANNOUNCES AGREEMENT TO ACQUIRE RHODE ISLAND GAS DISTRIBUTION BUSINESS FROM SOUTHERN UNION COMPANY • Rhode Island gas distribution business to be acquired from Southern Union Company for $575m (£329m) • Significantly expands National Grid's gas distribution activities in the Northeastern US • Strong overlap with National Grid's existing electricity distribution operations creates synergy potential National Grid plc ("National Grid") today announces that it has reachedagreement with Southern Union Company ("SUG") to acquire its Rhode Island gasdistribution business for a cash consideration of $498m (£285m), along with theassumption of $77m (£44m) of debt. The consideration also includes areimbursement for working capital and a benefit from step up in tax basisavailable under US tax regulations for an asset sale. SUG's Rhode Island gas business serves approximately 245,000 customers through adistribution network of over 3,000 miles of mains. The network substantiallyoverlaps National Grid's existing electricity distribution company in RhodeIsland, which serves approximately 477,000 customers. This strong overlap isexpected to create opportunities for savings. The acquisition also increases the size of National Grid's US gas operations andreinforces its position as a leading player in energy distribution in theNortheastern US. The rates for SUG's Rhode Island gas distribution business areset by the same state regulators as National Grid's electricity distributioncompany in Rhode Island. Both businesses have a history of performing underincentive based rate plans which provide substantial benefits to customers andshareholders. The transaction is expected to enhance National Grid's earnings per share(before exceptional items), immediately following completion. The considerationwill be satisfied by general corporate debt. Michael E. Jesanis, President and Chief Executive Officer of National Grid's USbusiness said, "This transaction is a natural for us and is right in our backyard. But evenmore importantly, our company has provided utility service in Rhode Island formore than a century. We are looking forward to serving the additional onequarter million gas consumers in Rhode Island." Mr. Jesanis added, "National Grid delivers gas to 11 million homes in the UK and565,000 customers in upstate New York. Our new customers will reap the benefitsof our considerable international expertise in developing and implementing newtechnologies and innovations that enable us to serve customers safely, reliablyand efficiently." The transaction is subject to approval by Rhode Island regulatory authoritiesand clearance under the Federal Hart-Scott-Rodino Act. The sale is expected toclose in the summer of 2006. Rothschild acted as financial adviser to National Grid on the transaction. For ease of reference, in this document, all currency conversions between poundssterling and US dollars have been made at a rate of $1.75:£1.00. Contact details: National GridInvestorsDavid Campbell +44 (0)20 7004 3170 +44 (0)7799 131783(m)Richard Smith +44 (0)20 7004 3172 +44 (0)7747 006321(m)James Waite +44 (0)20 7004 3171 +44 (0)7977 440902(m) MediaClive Hawkins +44 (0)20 7004 3147 +44 (0) 7836 357173 Citigate Dewe RogersonAnthony Carlisle +44 (0)20 7638 9571 +44 (0)7973 611888(m) Cautionary statement This announcement contains certain statements that are neither reportedfinancial results nor other historical information. These statements areforward-looking statements within the meaning of Section 27A of the SecuritiesAct of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,as amended. Because these forward-looking statements are subject to assumptions,risks and uncertainties, actual future results may differ materially from thoseexpressed in or implied by such statements. Many of these assumptions, risks anduncertainties relate to factors that are beyond National Grid's ability tocontrol or estimate precisely, such as delays in obtaining, or adverseconditions contained in, regulatory approvals, competition and industryrestructuring, changes in economic conditions, currency fluctuations, changes ininterest and tax rates, changes in energy market prices, changes in historicalweather patterns, changes in laws, regulations or regulatory policies,developments in legal or public policy doctrines, the impact of changes toaccounting standards, technological developments, the failure to retain keymanagement, the availability of new acquisition opportunities or the timing andsuccess of future acquisition opportunities. Other factors that could causeactual results to differ materially from those described in this announcementinclude the ability to continue to integrate the US and UK businesses acquiredby or merged with National Grid, the failure for any reason to achievereductions in costs or to achieve operational efficiencies, unseasonable weatherimpacting on demand for electricity and gas, the behaviour of UK electricitymarket participants on system balancing, the timing of amendments in prices toshippers in the UK gas market, the performance of National Grid's pensionschemes and the regulatory treatment of pension costs, the impact of theseparation and sale by National Grid of four of its UK gas distribution networksand any adverse consequences arising from outages on or otherwise affectingenergy networks owned and/or operated by National Grid. For a more detailed description of these assumptions, risks and uncertainties,together with any other risk factors, please see National Grid's filings withthe US Securities and Exchange Commission (and in particular the "Risk Factors"and "Operating and Financial Review" sections in its most recent annual reporton Form 20-F). Recipients are cautioned not to place undue reliance on theseforward-looking statements, which speak only as of the date of thisannouncement. National Grid does not undertake any obligation to releasepublicly any revisions to these forward-looking statements to reflect events orcircumstances after the date of this announcement. Notes to Editors National Grid plc National Grid is an international energy delivery business, whose principalactivities are in the regulated electricity and gas industries. It owns thehigh-voltage electricity transmission system in England and Wales and operatesthe system across Great Britain. It also owns and operates the high pressure gastransmission system in Britain and its distribution business delivers gas to 11million homes and businesses in Britain. The Group has electricity transmission systems in northeastern US, anddistributes electricity in the Northeastern US to approximately 3.3 millioncustomers, and gas in upstate New York to around 565,000 customers. National Grid also has a number of businesses operating in related areas such aswireless infrastructure for broadcast and telecommunications, metering, andinterconnectors. It also operates a liquefied natural gas importation terminal. Southern Union Company Southern Union Company is engaged primarily in the transportation, storage anddistribution of natural gas. Through Panhandle Energy, the company owns andoperates 100% of Panhandle Eastern Pipe Line Company, Trunkline Gas Company, SeaRobin Pipeline Company, Southwest Gas Storage Company and Trunkline LNG Company- one of North America's largest liquefied natural gas import terminals. ThroughCCE Holdings, LLC, Southern Union also owns a 50% interest in and operates theCrossCountry Energy pipelines, which include 100% of Transwestern PipelineCompany and 50% of Citrus Corp. Citrus Corp. owns 100% of the Florida GasTransmission pipeline system. Southern Union's pipeline interests operateapproximately 18,000 miles of interstate pipelines that transport natural gasfrom the San Juan, Anadarko and Permian Basins, the Rockies, the Gulf of Mexico,Mobile Bay, South Texas and the Panhandle regions of Texas and Oklahoma to majormarkets in the Southeast, West, Midwest and Great Lakes region. Through itslocal distribution companies, Missouri Gas Energy, PG Energy and New England GasCompany, Southern Union also serves approximately one million natural gasend-user customers in Missouri, Pennsylvania, Rhode Island and Massachusetts. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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