NEWS RELEASE
TUCSON, Ariz.–(BUSINESS WIRE)–The Board of Directors of UNS Energy Corporation (NYSE: UNS) has unanimously approved a definitive merger agreement with Fortis, Inc. (TSX: FTS), Canada’s largest investor-owned gas and electric distribution utility, that calls for Fortis to acquire all of the outstanding common stock of UNS Energy for $60.25 per share in cash.
“They proposed this partnership because they like the way we do business, not because they’re looking to change it.”
The $4.3 billion transaction, which includes the assumption of approximately $1.8 billion in debt, would provide additional capital and new resources for UNS Energy’s subsidiaries, including Tucson Electric Power (TEP) and UniSource Energy Services (UES). Both companies will remain headquartered in Tucson under local control with current management and staffing levels and no planned changes to existing operations or rates.
“Joining the Fortis family will provide UNS Energy with new financial strength, helping us maintain safe, reliable and affordable service for our utility customers as we address the capital-intensive challenges facing our industry,” said Paul Bonavia, UNS Energy’s Chairman and Chief Executive Officer.
Fortis also shares UNS Energy’s commitment to customer service and community support and has pledged to maintain or expand TEP’s and UES’ charitable giving, philanthropic partnerships and low-income assistance, said David Hutchens, UNS Energy’s President and Chief Operating Officer.
“Fortis has built a successful track record of investing in fundamentally strong utilities that remain deeply engaged with the communities they serve,” Hutchens said. “They proposed this partnership because they like the way we do business, not because they’re looking to change it.”
The proposed acquisition will be submitted early next year for the approval of UNS Energy shareholders. The transaction is also subject to the approval of regulators, including the Arizona Corporation Commission (ACC) and Federal Energy Regulatory Commission (FERC); the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; and the satisfaction of customary closing conditions. UNS Energy anticipates the transaction will be finalized before the end of 2014.
Fortis, based in St. John’s, Newfoundland, serves more than 2.4 million customers through its regulated utilities. Fortis owns electric utilities in five Canadian provinces and two Caribbean countries; a natural gas company in British Columbia, Canada; and a gas and electric utility in New York – Central Hudson Gas and Electric Corporation, which it acquired in June 2013.
“UNS Energy will be able to avail itself of the operational, regulatory and financial expertise throughout Fortis. The addition of UNS Energy to Fortis enhances UNS Energy’s ability to deliver safe, reliable, cost-effective energy service to its customers,” said Stan Marshall, President and Chief Executive Officer of Fortis.
“UNS Energy will remain a standalone utility in the Fortis model. Its headquarters and management team will remain in Tucson, Arizona and its customers will not pay for any costs related to the transaction,” Marshall said. “UNS Energy employees share the same commitment to serving their customers and communities as employees throughout our federation of utilities and we look forward to welcoming them to Fortis.”
Fortis’ financial strength will improve UNS Energy’s access to capital to fund the ongoing diversification of its generating fleet as well as other infrastructure investments. Upon closing, Fortis will inject $200 million into UNS Energy to strengthen its balance sheet and help fund the planned purchase of Unit 3 at the natural gas-fired Gila River Power Plant, a transaction that will reduce TEP’s reliance on coal-fired power.
Fortis also will help UNS Energy maintain its position as an industry leader in renewable energy through support for its investments in solar power systems serving TEP and UES customers. TEP was recognized as 2012 Investor-Owned Utility of the Year by the Solar Electric Power Association. Both TEP and UES are on track to meet or exceed Arizona’s Renewable Energy Standard, which requires utilities to increase their use of renewable energy each year until it represents 15 percent of their power in 2025.
Lazard served as UNS Energy’s financial advisor for this transaction, and Baker Botts L.L.P. served as UNS Energy’s legal advisor.
About UNS Energy:
UNS Energy is a Tucson, Arizona-based company with consolidated assets of approximately $4 billion. TEP serves approximately 412,000 customers in southern Arizona. UES provides natural gas and electric service for approximately 242,000 customers in northern and southern Arizona. UNS Energy shares are listed on the New York Stock Exchange and trade under the symbol UNS. To learn more, visit uns.com.
About Fortis:
Fortis is the largest investor-owned gas and electric distribution utility in Canada with total assets of approximately $17.6 billion, as at September 30, 2013, and fiscal 2012 revenues totaling approximately $3.7 billion. The Corporation serves more than 2.4 million customers across Canada and in New York State and the Caribbean. Its regulated holdings include electric distribution utilities in five Canadian provinces, New York State and two Caribbean countries and natural gas utilities in British Columbia, Canada and New York State. Fortis’ unsecured debt is rated A- by S&P and A (low) by DBRS.
