FERC Tuesday approved a request for a temporary waiver of the agency’s capacity-release rules to facilitate the acquisition by Barclays Bank PLC of UBS’ natural gas trading portfolio in the United States. Both sides asked the Federal Energy Regulatory Commission to act quickly so they could close the transaction by Wednesday (Dec. 31).
“Because of the expedited nature of the negotiations leading to [this] agreement, as well as the difficult environment facing U.S. and international credit and capital markets, [Barclays and UBS] request a temporary waiver of the Commission’s capacity-release policies and regulations, including the shipper-must-have-title policy, the prohibition on buy-sell arrangements and the prohibition on tying arrangements,” the FERC order said [RP09-157].
London-based Barclays and UBS, a subsidiary of Switzerland-based UBS AG, requested the waiver because they fear that in their haste to close the transaction and transfer the trading assets, they may commit “inadvertent violations of the Commission’s policies or regulations.”
In granting the request, FERC said the waiver would be in effect for a limited transition period until 90 days after the closing of the transaction between Barclays and UBS. And it noted that the waiver could only be used for the limited purpose of completing Barclay’s purchase and integration of UBS’ gas trading assets.
With the sale of its trading assets to Barclays, UBS will effectively exit its commodities business in the United States, excluding precious metals. Barclays will be acquiring all of UBS’ energy and natural gas agreements, including gas purchase and sale agreements, as well as natural gas transportation and storage agreements, according to the FERC order.
UBS is unloading its commodities business as part of a repositioning of its investment banking division, and in response to the downturn in financial markets during the past couple of months (see Daily GPI, Oct. 6).
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