Agreement Represents Significant Long-Term Investment to Support the
Success of El Paso Electric, Its Employees, Customers and Communities
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Agreement Enhances El Paso Electric’s Ability to Meet Growing
Service Area Needs, Including Renewable Energy and Sustainability
Initiatives
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Agreement Contains Meaningful Commitments to Ensure El Paso
Electric’s Workforce Will Remain in Place
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El Paso Electric to Remain Independently-Operated, Regulated
Utility with Headquarters in El Paso, Texas
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Customers to Benefit from $21 Million in Credits on Electric
Bills Over 36 Months and Continued Commitment to Safe, Clean,
Affordable and Reliable Energy with Strong Service Levels
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Establishes 20-Year, $100 Million Community Economic
Sustainability Fund to Support El Paso Electric’s Service Area
EL PASO, Texas & NEW YORK--(BUSINESS WIRE)--
El Paso Electric Company (EPE) (NYSE: EE) and the Infrastructure
Investments Fund, an investment vehicle advised by J.P. Morgan
Investment Management Inc. (IIF), today announced that they have entered
into a definitive agreement under which IIF will purchase EPE for $68.25
in cash per share representing an enterprise value of approximately $4.3
billion.
“As we look to the future and the long-term investment required to meet
the growing energy needs of our communities, we are confident IIF is the
ideal partner for our region and EPE. This agreement demonstrates that
IIF values local job retention and growth; creating a sustainable path
to enhance our renewable energy resources and protecting the
environment; and treating our 1,100 employees, their families and our
customers with transparency and respect,” said Mary Kipp, President and
CEO of El Paso Electric. “Our partnership brings value to everyone; our
customers, shareholders, our employees and community. This is a
tremendous opportunity to scale and prepare the Company for a clean
energy future that is local and sustainable.”
As a long-term investor in utility companies, IIF is aligned with EPE
and its mission, and the terms of the agreement include specific
commitments to support the growth and success of EPE, its employee base,
customers and communities. In the agreement, EPE and IIF have agreed to
a number of commitments, which will take effect upon closing and include:
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Local Workforce Retention and Continuity: Contains real
commitments to ensure that EPE’s workforce, including union and
non-union employees and management, will remain in place. EPE will
continue as an independently-operated, regulated utility while
remaining headquartered in El Paso, Texas.
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Electric Bill Credit for Customers: EPE and IIF have committed
to $21 million in credits on customer electric bills over 36 months.
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Community Contributions: EPE and IIF remain committed to $1.2
million in annual charitable contributions under EPE’s existing
Community Partner Program, which provides employee engagement and
financial support to many local organizations that positively impact
EPE’s service area.
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Community Economic Sustainability Fund: EPEandIIF
have committed to establish a Community Economic Sustainability Fund
to invest $100 million over 20 years to fund growth and economic
development in EPE’s service area while also taking steps to ensure
the continued financial strength of EPE as an engine for local
economies.
Matthew LeBlanc, Chief Investment Officer of J.P. Morgan’s
Infrastructure Investments Group, said, “We are excited about the
opportunity to partner with El Paso Electric, its communities and
customers in EPE’s next phase of growth. As a long-term owner of
utilities, we understand the importance of EPE’s mission and believe our
resources and experience can expand EPE’s leadership as a provider of
safe, clean, affordable and reliable energy. We have great respect for
the strong team of employees at EPE and look forward to working closely
with them as active corporate citizens that provide support for
programs, organizations and activities that positively impact
communities across west Texas and southern New Mexico.”
Agreement Details
IIF will purchase EPE for $68.25 per share in cash representing an
enterprise value of approximately $4.3 billion, including EPE’s net
debt. The per share purchase price represents a 17% premium to EPE’s
closing price on May 31, 2019, the last trading day prior to the
announcement of the agreement. The agreement has been unanimously
approved by EPE’s Board of Directors and is expected to close in the
first half of 2020, subject to the approval of EPE’s shareholders, the
receipt of regulatory approvals and other customary closing conditions.
Dividends payable to EPE shareholders will continue in the ordinary
course through the closing.
Advisors
Lazard is serving as financial advisor and Baker Botts L.L.P. is acting
as legal advisor to EPE. BofA Merrill Lynch is acting as exclusive
financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP is acting
as legal advisor to IIF. In addition, IIF has a committed bridge
financing facility in place led by BofA Merrill Lynch to support the
transaction.
About El Paso Electric
El Paso Electric is a regional electric utility providing generation,
transmission and distribution service to approximately 428,000 retail
and wholesale customers in a 10,000 square mile area of the Rio Grande
valley in west Texas and southern New Mexico.
About The Infrastructure Investments Fund
The Infrastructure Investments Fund (IIF) is an $11.3 billion private
investment vehicle advised by a dedicated infrastructure investment
group within J.P. Morgan Investment Management Inc. IIF is responsible
for investing and growing the retirement funds of more than 40 million
families, including 2 million people across Texas and New Mexico who
will be invested in El Paso Electric. Headquartered in New York and
London, IIF’s investments are generally focused on companies that
provide essential services, such as energy, water and transportation, to
local communities either under a regulatory construct or long-term
contracts.
IIF’s 19 portfolio companies are located primarily in the United States,
Western Europe and Australia, and include 11 energy, utility and
electric generation companies. IIF also has significant experience
developing renewable energy sources, having invested approximately $3
billion in renewable power generation assets which collectively provide
3.4 GW of renewable capacity (enough to power three million homes for a
year).
IIF’s family of companies serve over 20 million customers and employ
over 9,000 people who actively engage in their communities by building
good relationships, providing open and ongoing communications and
transparency over activities, and giving back through volunteer
activities, community funding and philanthropic initiatives.
Forward-Looking Statements
This news release includes statements that are forward-looking
statements made pursuant to the safe harbor provisions of the Section
27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, including statements
regarding the proposed acquisition of EPE, shareholder and regulatory
approvals, the expected timetable for completing the proposed
transaction and any other statements regarding EPE’s future
expectations, beliefs, plans, objectives, financial conditions,
assumptions or future events or performance that are not historical
facts. This information may involve risks and uncertainties that could
cause actual results to differ materially from such forward-looking
statements. These risks and uncertainties include, but are not limited
to: failure to obtain the required vote of EPE’s shareholders; the
timing to consummate the proposed transaction; satisfaction of the
conditions to closing of the proposed transaction may not be satisfied;
the risk that a regulatory approval that may be required for the
proposed transaction is not obtained or is obtained subject to
conditions that are not anticipated; the diversion of management’s time
on transaction-related issues.
Additional information concerning factors that could cause actual
results to differ materially from those expressed in forward-looking
statements is contained in EPE's most recently filed periodic reports
and in other filings made by EPE with the U.S. Securities and Exchange
Commission (the "SEC"), and include, but is not limited to: (i) the
impact of the federal law commonly referred to as the Tax Cuts & Jobs
Act and other U.S. tax reform legislation; (ii) increased prices for
fuel and purchased power and the possibility that regulators may not
permit EPE to pass through all such increased costs to customers or to
recover previously incurred fuel costs in rates; (iii) full and timely
recovery of capital investments and operating costs through rates in
Texas and New Mexico, and at the Federal Energy Regulatory Commission;
(iv) uncertainties and instability in the general economy and the
resulting impact on EPE's sales and profitability; (v) changes in
customers' demand for electricity as a result of energy efficiency
initiatives and emerging competing services and technologies, including
distributed generation; (vi) unanticipated increased costs associated
with scheduled and unscheduled outages of generating plant; (vii)
unanticipated maintenance, repair, or replacement costs for generation,
transmission, or distribution facilities and the recovery of proceeds
from insurance policies providing coverage for such costs; (viii) the
size of EPE’s construction program, the receipt of necessary permits and
approvals and EPE’s ability to complete construction on budget and on
time; (ix) potential delays in our construction and resource contracting
schedule due to legal challenges or other reasons; (x) costs at
Palo Verde; (xi) decisions and actions of EPE’s regulators and the
resulting impact on EPE's cost of capital, sales and profitability;
(xii) deregulation and competition in the electric utility industry;
(xiii) possible increased costs of compliance with environmental or
other laws, regulations and policies; (xiv) possible income tax and
interest payments as a result of audit adjustments proposed by the
Internal Revenue Service or state taxing authorities; (xv) uncertainties
and instability in the financial markets and the resulting impact on
EPE's ability to access the capital and credit markets; (xvi) actions by
credit rating agencies; (xvii) possible physical or cyber-attacks,
intrusions or other catastrophic events; (xviii) the U.S. Government
shutdown and the resulting impact on EPE's sales and profitability; and
(xix) other factors of which EPE is currently unaware or deem immaterial.
EPE's filings are available from the SEC or may be obtained through
EPE's website at http://www.epelectric.com.
Any such forward-looking statement is qualified by reference to these
risks and factors. EPE cautions that these risks and factors are not
exclusive. Management cautions against putting undue reliance on
forward-looking statements or projecting any future results based on
such statements or present or prior earnings levels. Forward-looking
statements speak only as of the date of this press release, and EPE does
not undertake to update any forward-looking statement contained herein.
Additional Information and Where to Find It
In connection with the proposed merger, EPE expects to file a proxy
statement, as well as other materials, with the SEC. WE URGE
INVESTORS TO READ THE PROXY STATEMENT AND THESE OTHER MATERIALS FILED
WITH THE SEC CAREFULLY WHEN THEY BECOME AVAILABLE BEFORE MAKING ANY
VOTING OR INVESTMENT DECISION BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED MERGER. Investors will be able to
obtain free copies of the proxy statement (when available) and other
documents that will be filed by EPE with the SEC at http://www.sec.gov,
the SEC’s website, or from EPE’s website (http://www.epelectric.com)
under the tab, “Investor Relations” and then under the heading “SEC
Filings.” In addition, the proxy statement and other documents filed by
EPE with the SEC (when available) may be obtained from EPE free of
charge by directing a request to Investor Relations, Phone:
1-800-592-1634. Media inquiries can be directed to Eduardo Gutierrez at
EPE, Phone: 915-497-3495.
Participants in the Solicitation
EPE, its directors and certain of its executive officers and other
persons may be deemed to be participants in the solicitation of proxies
from EPE’s shareholders with respect to the proposed merger. Information
regarding EPE’s directors and executive officers is available in its
definitive proxy statement for its 2019 annual meeting, filed with the
SEC on April 12, 2019. More detailed information regarding the identity
of potential participants, and their direct or indirect interests, by
securities, holdings or otherwise, will be set forth in the proxy
statement and other materials when they are filed with the SEC in
connection with the proposed merger.
View source version on businesswire.com:
https://www.businesswire.com/news/home/20190603005418/en/
National Media Contact:
Frances Jeter
Sard Verbinnen
& Co.
(832) 680-5120.
fjeter@sardverb.com
For El Paso Electric:
Local Media Contact
Eddie
Gutierrez | 915.497.3495
eduardo.gutierrez@epelectric.com
Investor Relations Contact
Lisa Budtke | 915.543.5947
lisa.budtke@epelectric.com
For IIF:
Barrett Golden / Tim Lynch
Joele Frank,
Wilkinson Brimmer Katcher
212.355.4449
Source: El Paso Electric Company