MONTREAL – Gaz Metro Inc., Quebec’s largest natural gas distributor, says it has struck a deal to sell to institutional investors in the United States and Canada US$260 million of corporate notes to help finance a major U.S. acquisition.
The money raised from the private placement financing, will be used to help finance the energy company’s acquisition of Central Vermont Public Service Corporation (NYSE:CV), a power producer in the New England state.
The US$702 million cash and debt deal was approved by Central Vermont shareholders earlier this fall and is expected to close next year pending U.S. regulatory approval.
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The agreement would lead to the merger of Vermont’s two largest electrical utilities and also make Gaz Metro the U.S. state’s dominant power seller.
“This private placement is another important step towards the acquisition of CVPS by Gaz Metro,” Pierre Despars, the Quebec company’s chief financial officer, said Friday.
“Moreover, it confirms the confidence from investors towards Gaz Métro, particularly in the context of turbulent financial markets.”
In the sale, Central Vermont shareholders will get US$35.25 per common share when the transaction closes.
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In making its July bid, Gaz Metro topped an earlier deal Central Vermont had struck with Fortis Inc. (TSX:FTS), a big Newfoundland-based power company with operations in Canada and abroad.
If the deal closes as expected next year, Gaz Metro would merge Central Vermont with Green Mountain Power, a subsidiary of Gaz Metro that is Vermont’s second-largest electric utility.
The transaction will create the 75th largest electricity distributor in the United States, serving nearly 250,000 customers or about 70 per cent of Vermont electrical needs .
Valener Inc. (TSX:VNR) owns 29 per cent of the Gaz Metro Limited Partnership, which runs the Gaz Metro business.
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