TECO Energy closes acquisition of New Mexico Gas Co.

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TECO Energy closes acquisition of New Mexico Gas Co.

TECO Energy Inc. has closed on its US$950 million acquisition of Albuquerque-based New Mexico Gas Intermediate (NMGI), the parent company of New Mexico Gas Co. (NMGC).

With the addition of NMGC ‘s more than 513,000 gas customers, TECO Energy ‘s utility subsidiaries now serve almost 870,000 regulated gas customers in two states, and more than 1.5 million regulated electric and gas customers in Florida and New Mexico.

John Ramil, president and chief executive officer of TECO Energy, staed:

Today is a special day for TECO Energy and New Mexico Gas Co. Our teams have worked tirelessly for more than a year to make this acquisition happen, and we couldn’t be more pleased to welcome New Mexico Gas Co. to the TECO family of companies.

With our permanent financing put in place in July under very favorable market conditions, and our expectations for efficiencies in New Mexico and Florida as a result of integrating the two companies, we are now optimistic that the transaction will be accretive to our earnings for the full year in 2015, which is sooner than previously expected.

The New Mexico Public Regulation Commission approved the transaction Aug. 13. TECO has agreed to own NMGC for at least 10 years. NMGC will retain its name, and its headquarters will remain in Albuquerque.

The transaction was financed through a combination of US$292 million of TECO Energy equity, the assumption of US$200 million of existing NMGC debt, the private placement of US$270 million of debt at NMGI and NMGC, cash on hand and short-term TECO Energy debt. The final purchase price is subject to customary adjustments post-closing.

Morgan Stanley acted as financial advisor to TECO Energy. Skadden, Arps, Slate, Meagher & Flom LLP and Cuddy & McCarthy LLP acted as legal advisors to TECO Energy. Edwards Wildman Palmer LLP acted as legal advisors to TECO Energy for acquisition financing.

Credit Suisse Securities (USA) LLC and Tudor, Pickering, Holt & Co. LLC acted as financial advisors to Continental Energy Systems LLC, the seller. Cravath, Swaine & Moore LLP acted as legal advisor to Continental Energy Systems LLC. Keleher & McLeod PA acted as regulatory legal advisor to NMGC.

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