(Host) Central Vermont Public Service has agreed to be bought by one of Canada’s largest utility companies – Fortis Incorporated.
As VPR’s Nina Keck reports, CVPS says the $700 million deal will benefit shareholders and customers, and will not hurt CVPS employees, or the company’s Rutland headquarters.
(Keck) CVPS President Larry Reilly says the sale began indirectly last fall when the utility was approached by an unnamed company with an unsolicited offer. When CVPS’ board of directors evaluated that offer and explored others – Reilly says competition to purchase the Vermont utility heated up.
(Reilly) "Towards the end the process we were able to identify Fortis as the company that had the best fit from a cultural perspective and a financial perspective."
(Keck) Fortis, based in Newfoundland, is Canada’s largest investor owned utility distribution company. It serves more than two million gas and electricity customers in five Canadian provinces as well three countries in the Caribbean.
In a press release, Fortis President Stanley Marshall says the acquisition of CVPS represents the initial entry by Fortis into the U.S. regulated electric utility marketplace and establishes a foundation for Fortis to grow in the U.S.
CVPS president Larry Reilly says that while his company will have a new parent company, no jobs will be affected.
(Reilly) "The management team is all going to stay on and continue to provide good service. We’re going to maintain our headquarters here in Rutland and continue to provide service to customers that way we always have."
(Keck) The deal will cost Fortis about $700 million – $470 million in cash to CVPS shareholders and an additional $230 million to cover the utility’s outstanding debt.
The deal represents a potential profit for CVPS shareholders of more than ten dollars a share, based on the close of the market last week. Fortis has also committed to paying 21 million dollars worth of as yet unspecified benefits to customers as required by Vermont’s Public Service Board.
CVPS’s Larry Reilly says it was an offer too good to pass up.
(Reilly) "We now have the resources of a big company behind us. We don’t have to worry if we’ll be cut out of the equity markets if we need capital for investments in new transmission facilities or any other needs for investments and that’s a huge benefit for a company and we can take our mind off being nervous about access to capital.
(Keck) The sale still needs to be approved by CVPS shareholders and regulatory agencies, including the Vermont Public Service Board. If the deal goes through, it will mean Vermont’s two largest utilities will be owned by Canadian companies.
Green Mountain Power was purchased in 2007 by Quebec based Gaz Metro.
Governor Peter Shumlin says that his administration will carefully examine the terms of the CVPS deal.
CVPS officials say the deal could be finalized in six to twelve months.
For VPR News, I’m Nina Keck in Rutland.