The deal would see AltaGas indirectly acquire all of the issued and outstanding common shares of PNG for $36.75 cash per share, for a total transaction valued at nearly $230 million. It would include PNG’s Northeast system, which consists of about 160 kilometres of transmission lines, 1,490 kilometres of distribution lines and a natural gas processing plant near Tumbler Ridge with a capacity of 120,000 cubic metres per day, and serves over 18,000 customers in the region.
"PNG is an outstanding strategic fit for AltaGas," said David Cornhill, chairman and CEO of AltaGas, in a statement. "PNG's management team and employees have a strong track record of delivering safe and reliable service to their customers and have excellent relationships with the communities in which they operate. We are pleased to welcome all PNG employees to our team. AltaGas has a long history of operating natural gas utilities across Canada and we will continue to deliver safe and reliable service to our customers."
His company states it is looking to capitalize on increased natural gas exploration and customer growth in the Northeast, and align its new assets with existing ones such as the Bear Mountain Wind Park near Dawson Creek and the Younger natural gas liquids extraction plant.
PNG has exclusive franchise agreements with the District of Taylor and the Cities of Dawson Creek and Fort St. John for 21-year terms, expiring in 2012, 2014 and 2018, respectively, as well as an operating agreement with the Village of Pouce Coupe. The Dawson Creek and Fort St. John agreements provide for payment of a percent fee on gross revenues from sales of gas to residential and commercial customers, and three percent of the gross revenue from the sale of the first 328,000 gigajoules per year to any industrial customer. PNG operates its gas distribution facilities in the Tumbler Ridge area pursuant to a certificate of public convenience and necessity issued by the BC Utilities Commission (BCUC), but no franchise fees are payable to municipality.
The franchise agreement with the City of Dawson Creek and the operating agreement with the Village of Pouce Coupe are renewable for a further term of 21 years at the option of either party, while the franchise agreements with the District of Taylor and City of Fort St. John give those municipalities the right to purchase the distribution system within the municipality on expiry of the franchise agreement at the fair market value of the assets.
AltaGas will also acquire PNG’s three run-of-river projects.
The proposed acquisition is subject to approval of at least two-thirds of the votes cast at a special meeting of PNG shareholders expected to be held on Dec.12, 2011, as well as approval by the BC Supreme Court and the BCUC.