KINGMAN - The upcoming sale of UniSource Energy Services' parent company, UNS Energy Corporation, will give both companies stronger footing in the energy market, according to their potential new owner.
Fortis Inc., Canada's largest investor-owned gas and electric distribution utility, will acquire all the outstanding common stock of UNS Energy Corporation this year for $60.25 per share in cash. The $4.3 billion transaction, which includes the assumption of about $1.8 billion in debt, would provide additional capital and new resources for UNS Energy's subsidiaries, which include UniSource.
The proposed acquisition will be submitted early this year for the approval of UNS Energy shareholders.
It also is subject to the approval of regulators, including the Arizona Corporation Commission and Federal Energy Regulatory Commission, the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and customary closing conditions.
UNS Energy anticipates the transaction will be finalized before the end of 2014.
Fortis, based in St. John's, Newfoundland, serves more than 2.4 million customers through its regulated utilities.
Fortis owns electric utilities in five Canadian provinces and two Caribbean countries, a natural gas company in British Columbia, Canada, and a gas and electric utility in New York, called Central Hudson Gas and Electric Corporation, that it acquired in June 2013.
"UNS Energy will be able to avail itself of the operational, regulatory and financial expertise throughout Fortis," said Stan Marshall, president and chief executive officer of Fortis.
UNS Energy will remain a standalone utility, said Marshall, with its headquarters and management team remaining in Tucson.
Also, its customers will not pay for any costs related to the transaction. Fortis has pledged to maintain or expand UniSource's charitable giving, philanthropic partnerships and low-income assistance.
"Fortis has built a successful track record of investing in fundamentally strong utilities that remain deeply engaged with the communities they serve," said David Hutchens, president and chief operating officer for UNS Energy.
Fortis plans to inject $200 million into UNS Energy to strengthen its balance sheet and help fund the planned purchase of Unit 3 at the natural gas-fired Gila River Power Plant, a transaction that will reduce reliance on coal-fired power.
Fortis also will help UNS Energy support its investments in solar power systems serving UniSource customers.
UniSource is on track to meet or exceed Arizona's Renewable Energy Standard, which requires utilities to increase their use of renewable energy each year until it represents 15 percent of its power in 2025.