PORT HURON, Mich., July 15 /PRNewswire/ -- SEMCO ENERGY, Inc.
(Nasdaq: SMGS) today announced that it has signed a definitive agreement to
acquire ENSTAR Natural Gas Company and the Alaska Pipeline Company (together
known as "ENSTAR"). The Anchorage, Alaska-based natural gas distribution
system and transmission company are currently owned by Ocean Energy, Inc.
SEMCO ENERGY has agreed to buy ENSTAR for approximately $290 million in
cash, which includes the purchase of approximately $60 million of ENSTAR debt
held by Ocean Energy. At the completion of the transaction SEMCO ENERGY will
be reorganized so that ENSTAR and SEMCO ENERGY GAS COMPANY will be divisions
of SEMCO ENERGY. The combination will be accounted for using the purchase
method of accounting.
The acquisition is consistent with SEMCO ENERGY's strategic plan, which
includes expanding the company's gas distribution business. It is expected to
be accretive to both earnings and cash flow per share beginning in the first
full year following the completion of this transaction.
ENSTAR Natural Gas Company currently serves more than 100,000 residential,
commercial and industrial customers in the Anchorage area. The company has
experienced annual customer growth of nearly 3 percent in the last few years,
which is significantly above the natural gas industry average growth rate.
Alaska Pipeline Company delivers natural gas from several producing fields in
south central Alaska to ENSTAR Natural Gas Company's distribution system.
The combination of ENSTAR and SEMCO ENERGY creates a gas distribution
company with more than 350,000 gas customers and assets of nearly $700
William L. Johnson, Chairman, President and Chief Executive Officer of
SEMCO ENERGY, Inc. stated, "I am delighted that we were successful in
reaching this agreement with ENSTAR. It is an excellent, well-run company
with a long record of profitability in a growing gas market area and access to
an ample natural gas supply. This acquisition will accelerate our bottom line
He added, "The addition of ENSTAR also will increase the scale and scope
of SEMCO ENERGY operations, which ultimately will provide opportunities for
operational synergies, revenue growth and an increased presence in the public
financial markets." Johnson also noted that, "SEMCO ENERGY management has
developed an excellent record among its industry peers of being skilled at
managing utility properties in non-contiguous service areas in a very
efficient manner. ENSTAR fits well with our expertise."
The transaction is subject to regulatory approval by the Regulatory
Commission of Alaska and review under the Hart-Scott-Rodino Act. Final
approval is expected within six months.
Banc of America Securities LLC advised SEMCO ENERGY in this transaction
and financing is being provided through an interim bridge loan facility
arranged through the Bank of America. Permanent financing, which will likely
include a combination of equity and debt securities, is anticipated to be
completed within one year of closing.
SEMCO ENERGY is a diversified energy services and infrastructure company
currently organized into two major segments: natural gas distribution and
unregulated diversified businesses. The Company's natural gas distribution
group is operated under SEMCO ENERGY GAS COMPANY and currently serves over
250,000 customers in Michigan's Upper and Lower Peninsulas.
The diversified businesses are operated under SEMCO ENERGY VENTURES and
consist of energy engineering and quality assurance services, underground
construction services, propane operations and intrastate pipeline businesses
in Iowa, Kansas, Louisiana, Michigan, Missouri, New Jersey, Tennessee, Texas
This news release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995 that are based on
current expectations, estimates and projections. Statements that are not
historical facts, including statements about the Company's beliefs and
expectations are forward-looking statements. These statements are subject to
potential risks and uncertainties and, therefore, actual results may differ
Profile ENSTAR Profile SEMCO Combined
Business: Gas Distribution Gas Distribution Gas Distribution
& Intrastate & Intrastate
Service Area: Anchorage, Alaska Michigan Anchorage Region
and Surrounding and Michigan
Capacity: 410 MMcf/d 410 MMcf/d
Avg. Throughput: 120 MMcf/d 120 MMcf/d
Customers: 100,000 250,000 350,000
Gas Sales: 23.0 Bcf 41.0 Bcf* 64.0 Bcf
Gas Transportation: 20.8 Bcf 23.8 Bcf 44.6 Bcf
Deliveries: 43.8 Bcf 64.8 Bcf* 108.6 Bcf
Heating Degree Days 10,026 5,566 7,439
Financial Data($ in Millions)
Revenues $93.5 $286.7* $380.2
Net Income $11.3 $17.2* --
ROE 15.7% 15.3%* --
Assets $199.0 $489.7 --
Cash Flow $21.5 $30.0* --
Capital Expenditures $9.4 $25.2 --
* Reflects normal weather and excludes Gas Marketing business which was
sold in 1999
SOURCE SEMCO ENERGY, Inc.
CONTACT: Media: Barrett Hatches, 810-987-2200, ext. 4108, fax, 810-989-4098, or Analysts: Edric R. Mason, Jr., 810-989-4104, or fax, 810-989-4098, both of SEMCO ENERGY