ITC Holdings (NYSE: ITC) answered some technical questions raised by Entergy (NYSE:ETR) employees related to the companies’ proposed merger, according to a Form 425 filed Aug. 27.
Under the transaction, Entergy will spin off its transmission business into Mid South TransCo, which will subsequently merge into ITC.
Financing for the transaction will take place close to the merger’s expected close, the company said. Transaction close is expected in mid-2013.
Regarding a question about what happens to the Critical Infrastructure Protection (CIP) plan, ITC said that NERC’s Critical Infrastructure Protection Program will be transitioned to ITC and will fall under the responsibility of the ITC NERC CIP senior manager.
A question was raised regarding whether ITC would acquire the Entergy-owned property on which some transmission lines are located.
“Entergy’s transmission business requires real property rights in a number of forms that include, but not limited to, fee simple, easement, servitude, right of way, license, permit and lease. There are a number of teams currently identifying those properties and rights, the respective future needs of the transmission business and Entergy, and respective methods for transferring required rights. Generally, in situations where the use of tract or parcel of fee-owned property is exclusively transmission, that property will likely to be transferred in fee. In cases where a current or future use is required by both the transmission business and Entergy, the property may be subdivided and transferred in fee, or the transmission business may be granted an easement or servitude as circumstances dictate,” ITC said in the filing.
Employees who own unrestricted Entergy stock as of the closing date of the transaction, together with all other Entergy shareholders, will collectively receive 50.1% of the combined ITC company in exchange for their shares of Entergy’s transmission business in a stock-for-stock merger, subject to certain adjustments provided for in the merger agreement. ITC shareholders will own the remaining 49.9% of ITC.
According to the filing, a staffing team is working to identify Entergy employees who may become employees of ITC. The joint integration staffing team has defined three categories of Entergy employees based on their current role and ITC’s projected needs.
“Separating a business is not easy, and getting staffing process right is both critical and complicated,” said Christine Kujawa, vice president of human resources for ITC. “The actions we are taking now are building the foundation for a long-term, successful relationship with Entergy as our customer.”
The staffing team is working to complete the staffing and selection process by the end of 1Q13.