Breaking into the natural gas service segment through acquisitions, The Empire District Gas Co. said Thursday that it has completed the purchase of the Missouri natural gas distribution operations of Aquila Inc. The operations consist of 48,500 customers in 44 Missouri communities in northwestern, north central, and west central Missouri.
First announced in September 2005 (see Daily GPI, Sept. 22, 2005), Aquila entered into agreements to sell four utility businesses in Michigan, Minnesota, Missouri and Kansas to various companies for a total of $896.7 million. Aquila said at the time that the sales would help reposition the company while strengthening its financial condition and improving the financial performance of its regulated utility business.
Joplin, MO-based Empire said the total purchase price paid for the Missouri operations, including working capital and net plant adjustments of $17.1 million, was $102.1 million. Empire Distict said the permanent financing of the acquisition is expected to be a mix of debt and equity consistent with the company’s current consolidated capital structure. The acquisition was initially financed by $55 million of privately placed 6.82% First Mortgage Bonds due 2036 issued by The Empire District Gas Co., and with short-term debt issued by its parent company –The Empire District Electric Co. The short-term debt is expected to be replaced with common equity of The Empire District Electric Co.
After entering into the agreement, Empire received approval for the purchase from the Missouri Public Service Commission on April 18, 2006 (see Daily GPI, April 20).
“The purchase of the gas property will allow us to diversify our weather risk, balancing our current summer air conditioning peak with this natural gas winter heating peak,” said Ron Gatz, COO of Empire’s gas operations. “In addition, this property is located in close proximity and is regulated by an agency with whom we are familiar. It is a strategic fit for us. We offered employment to the 51 Aquila field employees who have been providing service to customers in these communities. Forty-eight employees have chosen to join us, and we look forward to working with them to grow this segment of our company.”
The Empire District Electric Co. and its subsidiaries provides electric service to 162,000 customers in southwestern Missouri, southeastern Kansas, northeastern Oklahoma, and northwestern Arkansas. They also provide natural gas service to 48,500 customers in northwestern, north central, and west central Missouri.
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