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LG&E Picks Up Leading Pipeline Construction Co.

LG&E Picks Up Leading Pipeline Construction Co.

LG&E Energy Corp. positioned itself to take advantage of the expanding pipeline construction industry last Friday by purchasing CRC Holdings Corp., parent of the pipeline construction equipment company CRC-Evans Pipeline International, for a total of $83.5 million. The deal closed last Friday. No layoffs are expected.

LG&E Energy purchased the entire Houston-based company for an initial consideration of $45.6 million and retirement of $37.9 million in CRC-Evans debt. The transaction also provides for future payments based on CRC-Evans meeting certain financial targets. The initial purchase and related costs will be paid 55% in cash and 45% in LG&E stock. LG&E will repurchase company common stock on the open market to fund the stock portion of the purchase.

Venture capital investment funds Equus II Inc. and Natural Gas Partners IV L.P. also owned interest in CRC-Evans and were bought out by LG&E. Members of the CRC-Evans team will continue running the company as a branch of LG&E's subsidiary, LG&E Capital Corp.

The projected demand for pipeline construction, which is the result from natural gas being the fuel of choice for power generation, was a key factor in the decision to buy CRC Holdings, LG&E said. This demand has caused a 58% increase in pipeline miles constructed from 1995 to 1998, the Lousiville-based energy company estimated, and it believes this trend will continue worldwide.

CRC-Evans supplies equipment for purchase and rental, and other services to major pipeline construction contractors, but it does not perform actual pipeline construction.

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