Monday, April 15, 2024

CenterPoint Energy Sells Louisiana and Mississippi Natural Gas Assets for $1.2 Billion

by BIZ Magazine

In a strategic move to optimize its utility portfolio, CenterPoint Energy, Inc. (NYSE: CNP) announced the sale of its Louisiana and Mississippi natural gas local distribution company (LDC) businesses to Bernhard Capital Partners, a private equity management firm, for $1.2 billion. The transaction, which includes approximately 12,000 miles of main pipeline and serves around 380,000 metered customers, marks a significant step in CenterPoint’s ongoing efforts to enhance its operational efficiency and focus on core utility operations.

“The sale of our Louisiana and Mississippi natural gas assets represents a strategic reallocation of capital that will enhance our ability to deliver sustainable returns to our investors while reinforcing our commitment to maintaining a robust natural gas business,” said Jason Wells, President and CEO of CenterPoint Energy. “We are confident that this transaction will unlock significant value for our shareholders and position us for continued growth and success in our core markets.”

Expressing gratitude to the dedicated employees of the Louisiana and Mississippi LDCs, Wells emphasized the company’s commitment to safety and performance. “I want to thank our employees for their unwavering dedication to serving our customers and communities,” he said. “Their hard work and dedication have been instrumental in building our natural gas business and ensuring the reliable delivery of energy to our customers.”

The sale, representing a multiple of 32 times the 2023 earnings of the Louisiana and Mississippi LDCs, is expected to close by the end of the first quarter of 2025, subject to regulatory approvals and customary closing conditions.

“This transaction aligns with our broader strategy of optimizing our utility operations and maximizing shareholder value,” Wells continued. “By divesting these assets, we can unlock approximately $1 billion in after-tax cash proceeds, which will be reinvested into our service territories with electric and natural gas operations. This strategic reallocation of capital will enhance our long-term earnings potential and support our growth initiatives.”

Wells reiterated CenterPoint’s commitment to maintaining a robust natural gas business, emphasizing that the company remains focused on its regulated natural gas utilities in Texas, Indiana, Minnesota, and Ohio, where it has significant footprints and rate bases.

Morgan Stanley & Co. LLC and Wells Fargo Securities, LLC acted as financial advisors to CenterPoint, while Latham and Watkins LLP, Phelps Dunbar LLP, and Brunini, Grantham, Grower & Hewes, PLLC provided legal counsel.

For more information about CenterPoint Energy, Inc., visit www.CenterPointEnergy.com.

About Bernhard Capital Partners

Bernhard Capital Partners is a private equity management firm focused on services and infrastructure. With approximately $3.4 billion of gross assets under management, Bernhard Capital Partners seeks to create sustainable value by acquiring, operating, and growing services and infrastructure businesses. For more information, visit www.BernhardCapital.com.

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