LG&E Energy Corp. positioned itself to take advantage of theexpanding pipeline construction industry last Friday by purchasingCRC Holdings Corp., parent of the pipeline construction equipmentcompany CRC-Evans Pipeline International, for a total of $83.5million. The deal closed last Friday. No layoffs are expected.
LG&E Energy purchased the entire Houston-based company foran initial consideration of $45.6 million and retirement of $37.9million in CRC-Evans debt. The transaction also provides for futurepayments based on CRC-Evans meeting certain financial targets. Theinitial purchase and related costs will be paid 55% in cash and 45%in LG&E stock. LG&E will repurchase company common stock onthe open market to fund the stock portion of the purchase.
Venture capital investment funds Equus II Inc. and Natural GasPartners IV L.P. also owned interest in CRC-Evans and were boughtout by LG&E. Members of the CRC-Evans team will continuerunning the company as a branch of LG&E’s subsidiary, LG&ECapital Corp.
The projected demand for pipeline construction, which is theresult from natural gas being the fuel of choice for powergeneration, was a key factor in the decision to buy CRC Holdings,LG&E said. This demand has caused a 58% increase in pipelinemiles constructed from 1995 to 1998, the Lousiville-based energycompany estimated, and it believes this trend will continueworldwide.
CRC-Evans supplies equipment for purchase and rental, and otherservices to major pipeline construction contractors, but it doesnot perform actual pipeline construction.
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