Bellevue, WA-based Puget Sound Energy (PSE) went private Friday with the closing of the $7.4 billion transaction between the combination utility's holding company, Puget Energy, and a consortium of private investor groups led by a North American unit of Australia-based Macquarie. All of the issued and outstanding PSE common shares were purchased for $30/share.
PSE's recent credit rating upgrade and successful sale of $250 million in utility revenue bonds were cited late last month as a strong indication that Wall Street is bullish on the deal, which the utility and buyers have consistently said would give PSE the billions of dollars in added capital it will need to upgrade and expand infrastructure (see NGI, Jan. 26).
On Jan. 16, after both Puget Holdings LLC, which was formed by the acquiring private investors' group, and PSE formally accepted the Washington Utilities and Transportation Commission's heavily conditioned approval, Standard & Poor's Ratings Services raised the utility's credit rating to "BBB" from "BBB-."
"The ratings upgrade is expected to result in meaningful savings for PSE customers for years to come due to reduced borrowing costs," PSE CEO Stephen Reynolds said.
Effective with the closing William Ayer, CEO of Alaska Air Group, became chairman of the boards of directors for Puget Energy and PSE. Reynolds relinquished his three-year title as chairman, remaining as president and CEO and staying on the boards of both companies in Bellevue, WA.
Reynolds claimed that the merger was already providing benefits to PSE's one million electric and 750,000 natural gas customers in western Washington state. "During this time of economic instability, PSE has been able to improve its credit rating and secure long-term credit facilities to improve and expand our energy delivery system, providing local jobs and meeting local needs," he said.
At a time when most companies are only able to secure one-year bank loans, PSE's merger has helped it obtain five-year deals, Reynolds said. "This is on top of the $100 million in rate credits and other savings over the next decade that customers will begin receiving as early as this month."
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