Oncor Electric Delivery (Oncor), Sempra Energy and InfraREIT, (InfraREIT) announced that Oncor's acquisition of InfraREIT and Sempra Energy's acquisition of a 50% stake in Sharyland Utilities (Sharyland) have now closed.
As a result of the acquisition, InfraREIT merged with and into a wholly owned subsidiary of Oncor and ceased to exist. The subsidiaries of InfraREIT became wholly owned indirect subsidiaries of Oncor.
“We are excited to successfully close this acquisition, and want to thank our stakeholders and the great people at InfraREIT for their hard work throughout this process,” said Oncor CEO Allen Nye. “This is an exciting time for Texas, the ERCOT market, and for Oncor as we integrate these high-quality transmission assets into our portfolio.”
Oncor acquired 100% of the equity interests of InfraREIT, including all the limited-partnership units in its subsidiary InfraREIT Partners, LP, for approximately $1.275 billion, or $21 per share (or partnership unit), excluding certain transaction costs. The shareholders of InfraREIT and limited partners of InfraREIT Partners, LP as of immediately prior to the effective time of the merger will also receive a prorated cash dividend of $0.1319. Additionally, InfraREIT’s common stock, which previously traded under the ticker symbol “HIFR,” has ceased trading and the New York Stock Exchange has initiated the delisting process.
In connection with the acquisition, Oncor received capital contributions from Sempra Energy and Texas Transmission Investment LLC (in amounts proportionate to their respective shares of Oncor’s outstanding equity interests) to fund the entire $1.275 billion purchase price plus certain fees and expenses relating to the acquisition.
“At Sempra Energy, we are focused on making disciplined investments in the most attractive growth markets in North America,” said Jeffrey W. Martin, chairman and CEO of Sempra Energy. “There is no question Texas is an exciting place to do business. Today’s investment underscores our commitment to the state, while creating a larger platform for Oncor to better meet the growing energy needs of Texans.”
In connection with closing, Oncor also extinguished all of InfraREIT’s outstanding debt (which totaled approximately $953.35 million principal amount at closing) by repaying approximately $602.50 million aggregate principal amount on behalf of InfraREIT’s subsidiaries and exchanging approximately $350.85 million aggregate principal amount of secured senior notes issued by InfraREIT subsidiaries for secured senior notes issued by Oncor.
Concurrently, Sempra Energy acquired its 50% limited partnership interest in the holding company that owns Sharyland (formerly Sharyland Utilities, LP) for $98 million, subject to customary post-closing adjustments.
As part of the transaction, a subsidiary of InfraREIT exchanged certain assets with Sharyland, with the end result being that Oncor now indirectly owns all of the electric transmission assets in Central, North and West Texas that were held by InfraREIT and Sharyland prior to the closing of the transactions, and Sharyland owns all of the assets in South Texas that were held by InfraREIT and Sharyland prior to the closing of the transactions. The assets Oncor acquired include approximately 1,575 miles of transmission lines, including 1,235 circuit miles of 345kV transmission lines and approximately 340 circuit miles of 138kV transmission lines. The Central, North and West Texas transmission system acquired by Oncor in the transaction is directly connected to approximately 20 operational generation facilities totaling approximately 3,900 MW and serves over 50 transmission stations and substations.
On May 9, 2019, the Public Utility Commission of Texas (PUCT) approved a final order granting regulatory approval for the transaction. PUCT approval was the final regulatory approval needed to complete the transactions. In addition to PUCT approval, the transaction received required approvals by the Federal Energy Regulatory Commission, the early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as well as other regulatory approvals. The transaction also required the approval of InfraREIT’s shareholders, which was received in February 2019.
Financial advisors for the transaction were Barclays for Oncor, Lazard for Sempra Energy, and Evercore for the InfraREIT Conflicts Committee. Legal advisors for the transaction were Vinson & Elkins LLP for Oncor, White & Case LLP for Sempra Energy, Hunton Andrews Kurth LLP for the InfraREIT Conflicts Committee, and Gibson, Dunn & Crutcher LLP for InfraREIT.
Source: Company Press Release