Tags: Louisiana | utility | Cleco | Macquarie

Louisiana's Cleco Bought for $3.4 Billion by Macquarie-Led Group

Monday, 20 October 2014 10:11 AM

Investors led by Australia’s Macquarie Group Ltd. agreed to buy Louisiana utility Cleco Corp. for $3.4 billion in cash, attracted by the steady, long-term returns of regulated power assets.

Macquarie, the largest private operator of U.S. utility assets, and Canadian fund manager British Columbia Investment Management Corp. will hold “the substantial majority” of Cleco when the deal is complete, according to an investor presentation posted online today. John Hancock Financial and other investors also joined in the deal, which includes the assumption of $1.3 billion in debt, the Pineville, Louisiana-based utility said in a statement today.

At $55.37 a share, the takeover values Cleco at 15 percent more than its Oct. 17 closing price. The acquisition requires approval from state regulators, some of whom had voiced concerns over the sale of the utility formerly known as Central Louisiana Electric Co. Under the agreement announced today, the buyers will keep a presence in Pineville, maintain rates and employee headcount and put at least four Louisiana residents on the board.

“We believe these conditions are crafted to appease Louisiana state regulators after they expressed concern at an early August,” meeting of the Louisiana Public Service Commission, Paul Ridzon and John Barta, analysts for KeyBanc Capital Markets Inc., said in a research report for clients today.

Louisiana Native

Bruce Williamson will be replaced as chief executive officer by Louisiana-native Darren Olagues, president of Cleco Power LLC and former chief financial officer of the company.

The transaction was announced before the start of regular trading on U.S. markets. Cleco gained 11 percent to $53.80 at 8:53 a.m. in New York. Prior to the announcement, the utility had fallen 16 percent since it first said it had received takeover interest in June.

The transaction is expected to close in the second half of next year. Last month, Macquarie, a specialist in investing in regulated infrastructure assets, appeared to be faltering in its attempts to buy the utility because co-investors were skeptical of the returns, people familiar with the matter said at the time. Today, Macquarie lauded Cleco’s prospects.

“A well-run utility like Cleco, operating in an environment in which our experience and expertise can help drive additional growth, represents a very good opportunity for our investors,” said Chris Leslie, CEO of the Macquarie Infrastructure Partners III fund.

Cleco owns 11 generating units with 3,340 megawatts of capacity and about 284,000 customers.

Operate Independently

Louisiana Public Service Commissioner Clyde Holloway called for Williamson to resign in August, saying that the executive was only interested in selling the utility, according to a transcript of the meeting. The deal also requires approval from federal energy regulators.

“Cleco’s existing investors will receive an exceptional value for their shares to top off a superior total shareholder return of the past few years, and our customers and employees can expect us to retain our strong commitment to service and reliability,” Williamson said today.

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Investors led by Australia's Macquarie Group Ltd. agreed to buy Louisiana utility Cleco Corp. for $3.4 billion in cash, attracted by the steady, long-term returns of regulated power assets.
Louisiana, utility, Cleco, Macquarie
Monday, 20 October 2014 10:11 AM
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