Piedmont Natural Gas boosted its customer service base in North Carolina, by agreeing to a two-part deal on Thursday that includes the stock purchase of North Carolina Natural Gas (NCNG), a distribution subsidiary of Progress Energy, and Progress Energy’s investment in EasternNC, a gas delivery service, for approximately $425 million in cash. The acquisition includes the 176,000 NCNG residential, commercial and industrial natural gas customers in eastern and southern North Carolina, giving Piedmont more than 454,000 customers in the state, and a total of 901,000 customers in North Carolina, South Carolina and Tennessee.

The purchase is the second this month for the Charlotte, NC-based company, after Piedmont completed its purchase of North Carolina Gas Service (NCGS), the North Carolina gas distribution division of NUI Corp. (see Daily GPI, Oct. 2). NCGS serves customers in Rockingham and Stokes counties, contiguous to Piedmont’s existing service territory. In 2001, Piedmont purchased the gas distribution system serving customers in the Gaffney area of Cherokee County, SC, from Atmos Energy Corp. Last year it also began service to new territory in Avery, Mitchell and Yancey counties in North Carolina.

Piedmont COO Thomas E. Skains said the NCNG purchase would add to the company’s earnings beginning in 2004. The company will use short-term debt financing to close the transaction, expected in mid-2003. Piedmont CEO Ware F. Schiefer added that the company was looking forward to serving the NCNG customers, as well as assisting in the economic development of eastern North Carolina with its investment in EasternNC. EasternNC is a joint venture with the Albemarle Pamlico Economic Development Corp., which delivers gas service to 14 counties in eastern North Carolina.

The boards of directors of both companies have approved the transaction. Still to come is approval from state and federal officials. Piedmont was advised by Merrill Lynch and by the law firm of Nelson Mullins Riley & Scarborough. Progress Energy was advised by Salomon Smith Barney and by the law firm of Hunton & Williams.

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