Semco Energy, Inc. to Be Acquired by Cap Rock Holding Corporation for $8.15 per Share in Cash
PORT HURON, Mich. -- SEMCO ENERGY, Inc. (NYSE: SEN - News) today announced that it has entered into a definitive agreement under which Cap Rock Holding Corporation will acquire all of the outstanding Common Stock and 5% Series B Preferred Stock of SEMCO. Under the terms of the agreement, SEMCO's shareholders will receive $8.15 in cash for each share of Common Stock they hold, representing a premium of approximately 37 percent over SEMCO's average closing share price during the five trading days ended February 22, 2007. The holders of the Series B Preferred Stock will receive $213.07 per share plus a "make-whole" premium calculated at closing. The transaction is valued at approximately $867 million, including the assumption of approximately $515 million of debt. Cap Rock is a utility holding company with electric utility transmission and distribution assets serving 28 counties in the State of Texas.
The Board of Directors of SEMCO, upon the unanimous recommendation of its Finance Committee (which is comprised entirely of independent directors), has approved the agreement and has recommended that the holders of SEMCO's Common Stock approve the transaction at a meeting to be held at a future date determined in accordance with the agreement. The transaction is subject to approval by holders of SEMCO's Common Stock, as well as other customary closing conditions, including the receipt of applicable regulatory approvals. Cap Rock has obtained financing commitments in the full amount of the consideration to be paid to holders of Common Stock and Series B Preferred Stock.
Under the terms of the agreement, SEMCO may solicit alternative proposals from third parties for a period of 35 days from the execution of the agreement and intends to consider any such proposals with the assistance of its advisors during this "go-shop" period. If SEMCO accepts a superior proposal, a break- up fee and other expenses would be payable to Cap Rock.
"After careful analysis, the Finance Committee and the Board of Directors have determined that this transaction is the right strategic decision for SEMCO and is in the best interests of our shareholders," said Donald W. Thomason, Chairman of the Board of Directors of SEMCO. "The price to be paid by Cap Rock in the proposed transaction provides shareholders with a significant premium for their shares over the current market price. This transaction also will give SEMCO a financially strong owner with experience in the regulated utility industry. This combination of access to additional capital and familiarity with what utility regulators and customers expect should help ensure that customers will continue to enjoy dependable natural gas distribution service in our Michigan and Alaska service territories."
George Schreiber, Jr., SEMCO's President and Chief Executive Officer said, "I am very pleased that Cap Rock has committed in the agreement to honor all existing collective bargaining agreements and to maintain current compensation and benefits levels for employees, for at least two years after the transaction closes. SEMCO's headquarters will remain in Port Huron and we expect current management to remain in place."
Russell Triedman, Chairman of Cap Rock said, "I believe that together, Cap Rock and SEMCO will be a stronger, more financially stable utility that can better serve its customers. The transaction will significantly improve SEMCO's debt to equity ratio and will help ensure that SEMCO's customers continue to receive the high standard of safety and service for which SEMCO is known."
Credit Suisse Securities (USA) LLC is serving as financial advisor to SEMCO in connection with the proposed transaction. In addition, BB&T Capital Markets was retained by the Finance Committee of the Board of Directors to provide certain additional financial advisory services. Troutman Sanders LLP is acting as legal advisor for SEMCO, and Dykema Gossett PLLC is acting as legal advisor for the Finance Committee.
Berenson & Company, LLC is serving as financial advisor to Cap Rock. Cravath, Swaine & Moore LLP is acting as legal advisor for Cap Rock.
SEMCO expects to conduct its previously scheduled conference call to review 2006 fourth quarter and full year earnings results on March 14, 2007, at which time SEMCO will be available to comment on the proposed transaction.