Business Context and Reporting Period
This Form 8-K is filed by The Laclede Group, Inc. (Laclede) on May 20, 2013. The report addresses regulatory developments regarding Laclede Gas Company's base rate proceeding before the Missouri Public Service Commission (MoPSC) and provides updates on pending acquisitions of Missouri Gas Energy (MGE) and New England Gas Company (NEG).
Key Financial Metrics
The filing does not report Laclede's current revenue, profit, cash flow, or debt metrics. Instead, it discloses transaction values and filing requirements for acquired entities:
- MGE Acquisition Price: $975 million for substantially all assets and liabilities of Missouri Gas Energy.
- NEG Acquisition Price: $60 million for New England Gas Company.
- NEG Divestiture: Laclede agreed to sell its interest in the NEG acquisition to Algonquin Power & Utilities Corp. for $11 million.
- Financial Statements Filed: The report includes audited historical financial statements for MGE (years ended Dec 31, 2010-2012) and unaudited interim statements (ended March 31, 2013), as well as pro forma combined financial information for Laclede and MGE.
Material Changes and Developments
Rate Case Resolution: Laclede Gas, the MoPSC Staff, and the Office of Public Counsel reached an agreement in principle to resolve the base rate proceeding. The procedural schedule was suspended on May 20, 2013, to negotiate a formal stipulation, with a target filing date of June 3, 2013.
Acquisition Status:
- MGE: The acquisition agreement was assigned to Laclede Gas on January 11, 2013. Regulatory approval in Missouri is anticipated by late August 2013.
- NEG: Laclede entered an agreement to sell its stake in the NEG acquisition to Liberty Utilities (subsidiary of Algonquin Power) for $11 million. This divestiture is contingent on the closing of the NEG acquisition.
Guidance, Outlook, and Risks
Outlook: Management anticipates that resolving the base rate case will allow focus on the MGE Acquisition. A procedural schedule for the MGE acquisition is expected by May 24, 2013, with final regulatory approval targeted for late August 2013. Final approval for the NEG transaction is expected before the end of fiscal year 2013.
Risks and Contingencies:
- There is no assurance that the parties will reach a final agreement on the rate case or that the MoPSC will approve it.
- The MGE and NEG transactions are contingent upon regulatory approvals.
- Forward-looking statements regarding the MGE Acquisition are subject to risks that the transaction may not be consummated or anticipated benefits may not be realized.
Investor Verification Checklist
- Verify the filing of the joint stipulation and agreement for the Laclede Gas base rate case by June 3, 2013.
- Monitor the MoPSC procedural schedule for the MGE Acquisition, expected by May 24, 2013.
- Confirm the timeline for final regulatory approval of the MGE Acquisition (targeted late August 2013).
- Review the pro forma financial statements (Exhibit 99.3) to understand the combined financial impact of the MGE acquisition.
- Track the status of the divestiture of the NEG acquisition interest to Algonquin Power & Utilities Corp.