Homer Alaska - Business

Story last updated at 1:58 PM on Wednesday, February 8, 2012

Canadian firm to buy ENSTAR

The Associated Press

CALGARY, Alberta — AltaGas Ltd. announced Feb. 1 it has agreed to pay more than $1.1 billion for natural gas businesses in Alaska and Michigan, which it says are a good fit with its own assets and part of a strategy of becoming a top North American energy infrastructure company.

The Calgary-based gas processor and pipeline operator said it has agreed to buy SEMCO Energy of Port Huron, Mich., from Continental Energy Systems LLC, another Michigan company.

SEMCO owns a regulated natural gas distribution company in Alaska through ENSTAR Natural Gas and has part ownership of a gas storage terminal being built in Alaska. It also has gas distribution and storage businesses in Michigan.

ENSTAR is the largest natural gas distributor in Alaska, serving 132,000 mostly residential customers.

The transaction will add 570 employees in Alaska and Michigan to the AltaGas' workforce.

It's expected to be 10 percent accretive to AltaGas' earnings and cash flow per share and to add about $130 million in earnings before interest, taxes depreciation and amortization in 2013, the first full year of ownership.

AltaGas will take on $355 million in debt as part of the deal, which it will pay for by issuing a combination of equity and debt securities.

It plans to sell about $350 million in equity through a syndicate of investment dealers, which will have an option to increase the amount by 15 percent to cover overallotments.

AltaGas focuses on natural gas, power and regulated utilities and has its main pipeline, power and gas plant operations in the Canadian provinces of Alberta and British Columbia.