The local electric and gas company has been sold again, this time to a private investor group.
UniSource Energy Systems, which bought Citizens Arizona Electric and Citizens Arizona Gas in a deal that closed in August, has been sold as part of the sale of UniSource Energy Corp., the parent company.
"It is the same management, same rates, same commitment to the community and same salaries for all the workers," said Steve W.
Lynn, corporate communications director.
"It gives the company cash to retire debt and strengthen our ability to serve our customers."
UniSource Energy Corp.
on Monday announced it had approved an $850 million buyout offer from an investor group that includes New York-based buyout specialist Kohlberg Kravis Roberts and Co.
An affiliate of Saguaro Utility Group LP agreed to pay $25.25 per share of UniSource Energy common stock, a 30 percent premium to the stock's $19.40 a share closing price on Friday.
Saguaro group's general partner is Sage Mountain LLC, an Arizona company managed and owned by Frederick B.
Rentschler, former president and chief executive of Armour-Dial, Beatrice Companies and Northwest Airlines.
The group's limited partners include Kohlberg Kravis, J.P.
Morgan Partners and Wachovia Capital Partners.
Nelson, senior vice president of utility services for UniSource Energy, continues to serve as chief operating officer of the UniSource Energy Systems subsidiary.
Tom Ferry, former vice president and general manager of Citizens electric operations in Arizona, and Gary Smith, former vice president and general manager of Citizens gas operations in Arizona, serve in those same capacities for UES.
The sale makes no changes.
The company's Web sites also continue to operate, so UES customers can continue to pay bills and conduct other business online.
For more information about UES and its operations, visit www.uesaz.com.
The company will remain under the oversight of the ACC, which sets utility rates.
Electric rates for Mohave County residents served by UniSource Energy Systems were frozen at current levels until 2007 by the ACC in the Citizens purchase agreement.
UniSource Energy Corp.
serves about 550,000 utility customers in Arizona through Tucson Electric Power and UniSource Energy Services.
The transaction will allow Tucson Electric to reach 40 percent equity and UniSource to continue its growth plan, said James Pignatelli, chairman, president and chief executive of Tucson-based UniSource.
It also gives the utility the ability to retire $260 million to $300 million in debt, Pignatelli said.
Tucson Electric's debt exceeds $1.5 billion, he said.
"We will be a stronger company as a result of this transaction.
This investment ensures that we can maintain the service and reliability that have become our hallmarks while pursuing our plans to bring service improvements to our customers and communities," Pignatelli said.
The transaction, subject to shareholder and government regulator approval, is expected to close in the second half of 2004.
The deal will not affect rates paid by utility customers, the company said.
"There will be no change in the way we operate nor in the way we market our energy," Pignatelli said.
"These investors are here to continue the strategy.
They're not here to modify it."
Lynn said large institutional investors already owned 70 to 75 percent of UniSource Energy stock.
That has increased to 95 percent.
Arizona investors prior to the financial restructuring owned about 1 percent of the common stock, Lynn said.
The deal, which the company said was worth about $3 billion, provides up to $260 million in additional capital — including the retirement of $95 million in inter-company debt — to Tucson Electric Power Co., UniSource's main subsidiary.