PORT HURON, Mich., Feb. 23 /PRNewswire-FirstCall/ -- SEMCO ENERGY, Inc.
(NYSE: SEN) today announced that it has entered into a definitive agreement
under which Cap Rock Holding Corporation will acquire all of the outstanding
Common Stock and 5% Series B Preferred Stock of SEMCO. Under the terms of the
agreement, SEMCO's shareholders will receive $8.15 in cash for each share of
Common Stock they hold, representing a premium of approximately 37 percent
over SEMCO's average closing share price during the five trading days ended
February 22, 2007. The holders of the Series B Preferred Stock will receive
$213.07 per share plus a "make-whole" premium calculated at closing. The
transaction is valued at approximately $867 million, including the assumption
of approximately $515 million of debt. Cap Rock is a utility holding company
with electric utility transmission and distribution assets serving 28 counties
in the State of Texas.
The Board of Directors of SEMCO, upon the unanimous recommendation of its
Finance Committee (which is comprised entirely of independent directors), has
approved the agreement and has recommended that the holders of SEMCO's Common
Stock approve the transaction at a meeting to be held at a future date
determined in accordance with the agreement. The transaction is subject to
approval by holders of SEMCO's Common Stock, as well as other customary
closing conditions, including the receipt of applicable regulatory approvals.
Cap Rock has obtained financing commitments in the full amount of the
consideration to be paid to holders of Common Stock and Series B Preferred
Under the terms of the agreement, SEMCO may solicit alternative proposals
from third parties for a period of 35 days from the execution of the agreement
and intends to consider any such proposals with the assistance of its advisors
during this "go-shop" period. If SEMCO accepts a superior proposal, a break-
up fee and other expenses would be payable to Cap Rock.
"After careful analysis, the Finance Committee and the Board of Directors
have determined that this transaction is the right strategic decision for
SEMCO and is in the best interests of our shareholders," said Donald W.
Thomason, Chairman of the Board of Directors of SEMCO. "The price to be paid
by Cap Rock in the proposed transaction provides shareholders with a
significant premium for their shares over the current market price. This
transaction also will give SEMCO a financially strong owner with experience in
the regulated utility industry. This combination of access to additional
capital and familiarity with what utility regulators and customers expect
should help ensure that customers will continue to enjoy dependable natural
gas distribution service in our Michigan and Alaska service territories."
George Schreiber, Jr., SEMCO's President and Chief Executive Officer said,
"I am very pleased that Cap Rock has committed in the agreement to honor all
existing collective bargaining agreements and to maintain current compensation
and benefits levels for employees, for at least two years after the
transaction closes. SEMCO's headquarters will remain in Port Huron and we
expect current management to remain in place."
Russell Triedman, Chairman of Cap Rock said, "I believe that together, Cap
Rock and SEMCO will be a stronger, more financially stable utility that can
better serve its customers. The transaction will significantly improve
SEMCO's debt to equity ratio and will help ensure that SEMCO's customers
continue to receive the high standard of safety and service for which SEMCO is
Credit Suisse Securities (USA) LLC is serving as financial advisor to
SEMCO in connection with the proposed transaction. In addition, BB&T Capital
Markets was retained by the Finance Committee of the Board of Directors to
provide certain additional financial advisory services. Troutman Sanders LLP
is acting as legal advisor for SEMCO, and Dykema Gossett PLLC is acting as
legal advisor for the Finance Committee.
Berenson & Company, LLC is serving as financial advisor to Cap Rock.
Cravath, Swaine & Moore LLP is acting as legal advisor for Cap Rock.
SEMCO expects to conduct its previously scheduled conference call to
review 2006 fourth quarter and full year earnings results on March 14, 2007,
at which time SEMCO will be available to comment on the proposed transaction.
About SEMCO ENERGY, Inc.
SEMCO ENERGY, Inc. distributes natural gas to more than 400,000 customers
combined in Michigan, as SEMCO ENERGY GAS COMPANY, and, in Alaska, as ENSTAR
Natural Gas Company. SEMCO also owns and operates businesses involved in
propane distribution, intrastate pipelines and natural gas storage.
About Cap Rock Holding Corporation
Cap Rock Holding Corporation, through its regulated subsidiary, Cap Rock
Energy Corporation, transmits and distributes power to residential and
commercial customers in 28 counties in the State of Texas. Cap Rock owns no
generation facilities and instead purchases power wholesale through long-term
power supply contracts.
In connection with the proposed transaction, a proxy statement of SEMCO
and other materials will be filed with the Securities and Exchange Commission
(the SEC). SEMCO recommends investors read the proxy statement and other
materials, as well as any amendments or supplements to those documents,
carefully when they become available, as they will contain important
information about SEMCO and the proposed transaction. The final proxy
statement will be mailed to SEMCO's shareholders of record at the close of
business on the record date set for a special meeting of the shareholders to
be held for the purpose of approving the transaction. Investors will be able
to obtain free copies of the proxy statement, when available, as well as other
filed documents containing information about SEMCO at www.sec.gov and from
SEMCO's website at www.semcoenergy.com.
SEMCO and its directors and executive officers and other members of
management and employees may be deemed to be participants in the solicitation
of proxies from the shareholders of SEMCO in connection with the transaction.
Information about the directors and executive officers of SEMCO and their
ownership of SEMCO Common Stock is set forth in the proxy statement, dated
April 19, 2006, for SEMCO's 2006 annual meeting of shareholders, as filed with
the SEC. Additional information regarding the interests of participants in the
solicitation of Proxies may be obtained by reading the proxy statement for the
special meeting when it becomes available.
Caution Regarding Forward Looking Statements
Certain statements in this press release contain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995 that are based on current expectations, estimates and projections of
SEMCO. Statements that are not historical facts, including statements about
SEMCO's outlook, beliefs, plans, goals, and expectations, are forward-looking
statements. In addition, forward-looking statements generally can be
identified by the use of forward-looking terminology such as "may," "will,"
"expect," "intend," "estimate," "anticipate," "believe," or "continue" or the
negatives of these terms or variations of them or similar terminology. These
statements are subject to potential risks and uncertainties and, therefore,
actual results may differ materially from the expectations described in these
statements. Although SEMCO believes that the expectations reflected in these
forward-looking statements are reasonable, SEMCO cannot provide any assurance
that these expectations will prove to be correct. Important factors that
could cause actual results to differ materially from SEMCO's expectations
include but are not limited to risks associated with uncertainty as to whether
the transaction will be completed, costs and potential litigation associated
with the transaction, the failure to obtain SEMCO shareholder approval, the
inability to obtain, or meet specific conditions imposed for, applicable
regulatory approvals relating to the transaction, the failure of either party
to meet the closing conditions set forth in the agreement, the extent and
timing of regulatory approvals and the risk factors discussed from time to
time by SEMCO in reports filed with the Securities and Exchange Commission.
SOURCE SEMCO ENERGY, Inc.
CONTACT: analysts, Thomas Connelly, Assistant Treasurer and Director of
Investor Relations, +1-248-458-6163, or media, Timothy Lubbers, Director of
Marketing and Corporate Communications, +1-810-887-4208, both of SEMCO ENERGY,
0453 02/23/2007 07:30 EST http://www.prnewswire.com