A day after it made regulatory filings to spin off its sprawling gas transmission, storage and field services business, including Ontario utility Union Gas, as a separate company, Duke Energy on Friday named an executive team for the new corporation. It also announced the sale of a 49% stake in its massive real estate operations, Crescent Resources, to Morgan Stanley Real Estate for $1.4 billion after tax.
Duke said it will retain a 49% stake in the real estate company, which is based in Charlotte. The transaction ascribes a total enterprise value of $2.1 billion to Crescent. As part of the transaction, Crescent was recapitalized and borrowed $1.2 billion of new debt at closing, which will be classified off Duke Energy’s balance sheet. Substantially all debt proceeds were distributed to Duke.
“This joint venture will create opportunities for Crescent as it leverages Morgan Stanley Real Estate’s financial strength, access to capital markets, deal flow and expertise in land development,” said Duke CEO James E. Rogers. “While Duke Energy will retain a significant interest in the future success of the business, the new structure is consistent with our plan to focus primarily on the power business by reducing our investment and risk profile associated with non-core businesses.”
Crescent has land interests in nine states in the Southeast and southwestern United States.
Duke named Gregory L. Ebel, the current president of Union Gas, as CFO of the new GasCo spin-off. Alan Harris, current CFO of Duke Energy Gas Transmission (DEGT), will be chief development officer, and William S. Garner, currently DEGT’s corporate development officer, will serve as general counsel of the new company. Martha B. Wyrsch will be CEO of the gas transmission business, and William Easter will continue as CEO of Duke Energy Field Services. Julie Dill was named president of Union Gas.
“As we ready our company to operate as a successful, stand-alone entity, we build on a strong foundation of talent and experience,” said Fred J. Fowler, who will be CEO of the new company once the separation is complete, expected Jan. 1, 2007.
“I have great confidence in the leadership team we’ve assembled.”
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