Hydro One (TSX:H) and Avista (NYSE:AVA) on June 5 said that they have received approval from the Regulatory Commission of Alaska (RCA) for the companies’ proposed merger, subject to certain conditions, including that there will be no rate recovery of transaction costs or premium associated with the acquisition.
As noted in the June 4 order, Hydro One and Avista filed a joint application for Hydro One to acquire an indirect controlling interest in Alaska Electric Light & Power (AEL&P) through acquisition of Avista. AEL&P is a wholly owned subsidiary of Alaska Energy and Resources Company (AERC), which is a wholly owned subsidiary of Avista, the order noted.
“We find that Hydro One’s proposed acquisition of an indirect controlling interest in AEL&P is consistent with the public interest, subject to the condition that Hydro One and Avista fulfill” certain commitments, the RCA said.
The RCA said that its approval of the acquisition is subject to the condition that Hydro One and Avista adhere to such commitments as:
- AEL&P’s capital structure will be maintained at about the 54% equity and 46% debt levels that have been approved
- Costs related to Avista services to AEL&P and costs related to AEL&P services to Avista will be directly assigned and subject to review until such time as a cost allocation between the two utilities has been approved by the RCA
- AEL&P will continue to operate relatively independently from Avista, under the same experienced management team and employees as existed prior to Hydro One’s acquisition of Avista
Applications for regulatory approval of the transaction are still pending with regulators in Washington, Idaho, Oregon and Montana, the companies said on June 5.
An all-parties, all-issues settlement agreement was filed with the Washington Utilities and Transportation Commission in March; an all-parties, all-issues settlement agreement was filed with the Idaho Public Utilities Commission in April; an all-parties, all-issues settlement agreement was filed with the Public Utility Commission of Oregon in May; and a settlement agreement with the City of Colstrip was filed with the Montana Public Service Commission in May.
As TransmissionHub reported, according to the merger application that the companies filed with Washington regulators, for instance, under the terms of the all-cash transaction, Avista shareholders would receive $53 per common share, representing a 24% premium to Avista’s last sale price on July 18, of $42.74 per share. The aggregate purchase price is about $5.3bn, comprised of an equity purchase price of $3.4bn and the indirect assumption of about $1.9bn of debt, the application noted.
Hydro One and Avista on June 5 said that they received the Federal Communications Commission’s consent in May to close their merger, and antitrust clearance in April after the expiration of the waiting period under the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
The transaction received approval from FERC in January, and from Avista shareholders last November, the companies said, adding that the Committee on Foreign Investment in the United States has concluded that there are no unresolved national security concerns with respect to the transaction. Also required is the satisfaction of other customary closing conditions, the companies noted.