PORT HURON, Mich., Jan. 2 /PRNewswire/ -- SEMCO ENERGY, Inc.
(NYSE: SEN) today announced that it has completed its strategic review process
initiated last July. According to William L. Johnson, Chairman, President and
Chief Executive Officer, "During the last few months we have evaluated various
strategic combinations and potential transactions. As others in the utility
industry have recently found, the market for utility assets is currently
inadequate to create added value for our shareholders. Our situation was
further complicated by regulatory uncertainty at ENSTAR Natural Gas Company, a
utility division of SEMCO ENERGY in Alaska."
In July of last year, with the assistance of its financial advisor, Banc
of America Securities, LLC, SEMCO ENERGY began reviewing its strategic
alternatives, including possible merger or sale, with the objective of
completing that review by year end. In late November, the Regulatory
Commission of Alaska (RCA) issued an order requiring ENSTAR to file
information in addition to earlier data submitted as part of the change of
control approval to determine if rates are just and reasonable. This
development created uncertainty for prospective partners or buyers.
"We anticipated further regulatory review some time in the future when we
acquired ENSTAR, although not in this timeframe," Johnson said. "The
Regulatory Commission of Alaska is simply doing its job. As I have said
before, supplying this additional information presents an opportunity to work
with the Commission to demonstrate that our rates, which are among the lowest
in the country, are just and reasonable."
Johnson reaffirmed the Company's intent to resume executing its strategic
plan, increase earnings and improve profitability. He added, "Currently, we
find that the best path to maximizing shareholder value is to implement our
strategic plan. As always, should other opportunities or offers which
maximize shareholder value be presented in the coming months, we will evaluate
Amplifying on the Company's Strategic Plan, Johnson said, "Although as
noted later, results for 2000 likely will be less than desirable due to the
impact of warmer weather and other business events, all our businesses are
well positioned for considerably better results in 2001, with a little help
from the weather. In addition to focusing on internal revenue growth, part of
our strategy is to continue making selective acquisitions of a size consistent
with our ability to raise capital efficiently. These acquisitions, in energy
engineering and construction, as well as information technology, will help
grow our existing lines of business," Johnson said. "We look forward to a
brighter future for SEMCO ENERGY as we continue executing our business
With regard to 2000 earnings, the Company anticipates reporting earnings
per share for the year at approximately 10% below current analysts' estimates.
Major factors for lower earnings expectations are the impact of warmer-than-
normal weather during the fourth quarter at the Company's gas distribution
businesses in Michigan and Alaska. This impact has been reduced somewhat by a
colder-than-normal December in Michigan. In addition, construction services
revenues have been negatively impacted by inclement weather in November and
December in the Midwest that has delayed completion of scheduled projects and
by a slowdown in cable and fiber optic installations.
The Company has scheduled an earnings report for the fourth quarter and
full year 2000 on January 31, 2001.
SEMCO ENERGY, Inc. is a diversified energy and infrastructure company that
distributes natural gas to more than 350,000 customers combined in Michigan
and Alaska. It owns and operates businesses involved in gas engineering and
quality assurance services, pipeline construction services, propane
distribution, intrastate pipelines and natural gas storage in various regions
of the United States. In addition, it provides information technology and
outsourcing services, specializing in the mid-range computer market.
The following is a "safe-harbor" statement under the Private Securities
Litigation Reform Act of 1995. This release contains forward-looking
statements that involve risks and uncertainties including, but not limited to,
statements involving the Company's expectations regarding operating revenues
and expenses, operating income, returns on invested assets, regulatory
approval processes, success in obtaining new business, success in integrating
acquired businesses, and other risks detailed from time to time in the
Company's Securities and Exchange Commission filings.
SOURCE SEMCO ENERGY, Inc.
Web site: http: //www.semcoenergy.com
CONTACT: Analysts: Sebastian Coppola, 810-989-4101, fax: 810-989-4099, or Media: Francis R. Lieder, Jr., 810-987-2200, ext. 4186, fax: 810-989-4098, both of SEMCO ENERGY, Inc.