The Maryland Public Service Commission gave its blessing Wednesday, allowing the combination of WGL Holdings, Inc. (ticker: WGL) with AltaGas Ltd. (ticker: ALA) to proceed. The $4.5 billion merger brings together two energy companies. The commission voted 4 to 1 in favor of the merger.
Maryland PSC joins the Virginia State Corporation Commission, FERC, FTC, DOJ, and the Committee on Foreign Investment in approving the combination.
Merger benefits
According to the companies, the combined entity will have over $20 billion in energy infrastructure assets and an enterprise value over $17 billion. The merger also provides approximately $4.5 billion in secured growth projects and approximately $1.5 billion of additional growth opportunities in advanced stages of development through 2021, according to the companies.
- $100 million to expand natural gas infrastructure in the state of Maryland
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- $70 million over 10 years in the Washington Gas service area (which will be included in the Washington Gas’ rate base, subject to commission approval)
- $30.32 million to promote economic development, job creation and the expansion of natural gas infrastructure to underserved parts of Maryland, with a majority of this funding dedicated to the Washington Gas’ service territory.
- $30.5 million for a one-time $50 rate credit for Maryland residential heating customers and a rate credit for non-residential customers
- $22.8 million to Montgomery and Prince George’s counties for customer, educational, workforce development and energy efficiency programs, with at least 20% of such funds directed to benefit low- and moderate-income residents in both single- and multi-family communities
Financial
Financing to close the WGL Acquisition is fully backstopped with $2.6 billion in proceeds from AltaGas’ bought deal, and private placement of subscription receipts, which closed in the first quarter of 2017, and a $3 billion fully committed bridge facility, which may be drawn upon for closing and could remain in place for up to 18 months thereafter.
Management expects the repayment of the bridge facility to result from the monetization of over $2 billion from its asset sales process and from offerings of senior debt and hybrid securities.
“We are actively in discussions on several fronts, including the potential sale of appropriate minority interest(s) in our Northwest B.C. Hydro Facilities,” said David Harris, president and CEO of AltaGas.
One more approval left
The Maryland PSC is giving the companies until April 16, 2018, to indicate whether the companies will accept the new conditions that it is imposing as part of its approval.
With the favorable decision in Maryland, the companies now have one remaining regulatory review to complete in the District of Columbia. A final decision from the DC PSC is expected in mid-2018.
