Altagas to buy Semco Energy for $1.14B

Altagas said Wednesday it has agreed to buy privately held Continental Energy Systems’s Semco Energy Inc. unit for $1.14 billion US, adding natural gas distribution and storage assets in Michigan and Alaska to its Canadian distribution and gas-processing businesses.

Altagas said in a release that the purchase comes as it aims to expand into the northern United States, and will boost its earnings and cash flow by more than 10 per cent.

In the deal, the company will acquire a Michigan gas-distribution business with 286,000 customers as well as a regulated storage facility with 4.9 billion cubic feet of capacity and a half share in a 12.8-bcf unregulated storage facility.

It said it will also operate Alaska’s gas distributor with 132,000 residential customers and 11 bcf of gas storage now under construction.

To help pay for the purchase, Altagas will issue 12.1 million subscription receipts for $29 Cdn each to raise gross proceeds of $350 million Cdn.

If demand warrants, the issue’s underwriters, a group led by BMO Capital Markets, RBC Capital Markets and TD Securities, have the option to buy a further 1.8 million receipts, boosting gross proceeds to $403 million Cdn.

The proceeds will be held in escrow until regulators approve the acquisition.

Altagas shares were halted on the Toronto Stock Exchange before the announcement. They were last up 10 cents at $30.38.