An investor rights law firm has filed a class action lawsuit to block the $912 million sale of North American natural gas storage operator Niska Gas Storage Partners LLC to an affiliate of Brookfield Infrastructure.
Within a day of the recently announced sale, New York City-based Rosen Law Firm said it was investigating the Niska board's action in approving the sale, alleging "possible breaches of fiduciary duty and other violations of law by failing to adequately shop Niska to maximize shareholder value."
On June 14 Niska and its managing member reached "a definitive agreement" to be acquired by Brookfield, which owns a portfolio of utility, transportation, energy and communications assets, including natural gas storage facilities. The $4.225/unit purchase price was estimated to be an approximate 222% premium to the current trading price of common units, according to Niska.
The company, which operates the AECO Hub in Alberta, Wild Goose Storage in Northern California and Salt Plains in Oklahoma, said that it expects the deal to close in the second half of 2016, subject to customary closing conditions and regulatory approvals, including the California Public Utilities Commission.
Niska said the purchase price includes the assumption of debt by Brookfield, and that it has committed to lend up to $50 million to Niska under a short-term credit facility to be used for working capital purposes. It will be added to existing credit facilities, Niska executives said.
Noting that the company over the years has operated "premier gas storage facilities," Niska CEO Bill Shea said with the future association with Brookfield he looked forward "to continuing our world-class operation of the [existing three) facilities."
On a quarterly earnings conference call a day after the merger announcement, Shea reported more red ink for the storage firm as narrow price spreads and lack of volatility continued to plague the natural gas storage market (see Daily GPI, June 24).
The Rosen Law Firm's class action filing was reportedly in Delaware Chancery Court last Friday, alleging the Niska unitholders are being short-changed by the deal. Niska and Rosen did not respond to requests for more information by press time.