BLACK HILLS CORP. TO ACQUIRE SOURCEGAS HOLDINGS LLC

GlobeNewswire

  • Strategic acquisition accretive to EPS, beginning first calendar year after closing

  • Highly complementary fit enhances operating scale and efficiency of service delivery to customers

  • Increases customer base by 55%, to more than 1.2 million electric and natural gas utility customers

RAPID CITY, S.D. - July 12, 2015 - Black Hills Corp. (BKH) today announced it entered into a definitive agreement to acquire SourceGas Holdings LLC from investment funds managed by Alinda Capital Partners and GE Unit (GE) GE Energy Financial Services. SourceGas operates four regulated natural gas utilities serving approximately 425,000 customers in Arkansas, Colorado, Nebraska and Wyoming and a 512-mile regulated intrastate natural gas transmission pipeline in Colorado.

Black Hills Corp. is acquiring SourceGas for total consideration of $1.89 billion, including reimbursement of an estimated $200 million in capital expenditures through closing and the assumption of $720 million of debt projected at closing. The effective purchase price is $1.74 billion taking into account approximately $150 million of tax benefits resulting from the transaction. The transaction will add meaningfully to Black Hills` earnings per share beginning the first calendar year after closing.

This combination brings together two well-regarded utility operators with complementary geographic footprints, creating a stronger utility with enhanced operational expertise and financial resources to meet the region`s future energy needs. The combined entity will serve more than 1.2 million electric and natural gas utility customers in 790 communities in eight Rocky Mountain and Midcontinent states. Black Hills Corp. will operate the acquired company under the name Black Hills Energy.

"This announcement delivers on our commitment to grow earnings and create long-term shareholder value," said David R. Emery, chairman, president and chief executive officer of Black Hills Corp. "SourceGas is a great strategic fit, adding to our strong utility base and providing operational and financial benefits to all the customers and communities we serve. We are excited to significantly expand our presence in Colorado, Nebraska, and Wyoming, and look forward to serving customers and developing new relationships in Arkansas. The transaction continues our proven record of growth in the utility business through targeted acquisitions -- over the last decade, we have successfully integrated 19 electric and natural gas systems in support of this growth strategy."

The purchase of SourceGas unites two companies with above industry average growth rates. The combination enhances Black Hills` operating scale, which will help drive more efficient delivery of utility services, thereby benefitting customers. The acquisition provides additional capital investment opportunities in growing service territories and the ability to share best practices in support of organic growth initiatives. SourceGas enjoys attractive regulatory constructs in all states, allowing for timely recovery of capital expenditures and fair and reasonable allowed returns on equity.

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