Sempra moves to wrap up Oncor acquisition

22 August 2018

Sempra, a Fortune 500 energy company, and the parent company of San Diego Gas & Electric and Southern California Gas, is making a public stock offering of $1.6 billion to help wrap up its purchase of the entire stock of Oncor, the largest utility in Texas. The equity offerings come to $1.1 billion in common stock and $500 000 in preferred stock.

Earlier this year, Sempra completed the largest acquisition in its corporate history when it bought 80 % of Oncor, based in Dallas, for $9.45 billion. Including debt, the deal had an enterprise value of about $18.8 billion.

Sempra announced it would finance the acquisition with 65 % equity and 35 % debt.

Other financing needs will come from selling domestic renewables and some midstream assets. On June 28, Sempra's Chief Executive Officer Jeff Martin said the company will sell all of its solar and wind holdings in the USA, as well as gas storage facilities in the Deep South.

Under the terms of the Oncor deal, Sempra bought out the Texas utility's previous owner, Energy Futures Holdings, which declared bankruptcy in 2014.

Energy Futures Holdings was beset by a number of financial problems, including complications due to falling natural gas prices. By contrast, Oncor has been a consistent moneymaker, posting a $431 million profit in 2016, and described by at least one analyst as a "jewel asset."

Sempra officials have promised to keep Oncor's headquarters in Dallas and maintain the independence of the utility's board of directors. Company officials say  that the price tag in the Oncor deal will not lead to any increase in bills to customers, that it is strictly a deal involving Sempra and has no impact on California utility rates.

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