Today, Vistra Energy (NYSE: VST) and Crius Energy Trust (TSX:
KWH.UN) announced they have entered into a definitive agreement
pursuant to which Vistra will acquire Crius Energy for cash
consideration of C$7.57 per trust unit. Following the closing
of the transaction, Vistra will be the leading residential
electricity provider in the nation with operations in 19 states and
the District of Columbia.
“We are excited to announce this transaction, which will
accelerate Vistra’s retail growth expansion plans via the
acquisition of a high-quality electricity and gas retailer serving
primarily residential and small business customers,” said Curt
Morgan, Vistra’s President and Chief Executive Officer. “The
Crius Energy portfolio has a high degree of overlap with Vistra’s
generation fleet and complements Vistra’s existing municipal
aggregation and large commercial and industrial portfolio in the
Midwest and Northeast markets. We welcome the Crius Energy
team to the Vistra family.”
Morgan added, “This transaction is consistent with Vistra’s
stated strategy to grow our retail business at attractive multiples
while remaining committed to our capital allocation and
deleveraging plans.”
The announcement of this transaction follows a competitive
strategic review process led and unanimously recommended by the
Independent Directors of Crius Energy, and unanimously approved by
Crius Energy’s Board of Directors.
“We are pleased to announce this transaction and are confident
that it is in the best interests of our unitholders and other
stakeholders,” said Brian Burden, Chairman of Crius Energy’s Board
of Directors. “This transaction is the result of an
exhaustive review of strategic alternatives undertaken by our Board
of Directors, with the assistance of outside advisors, to maximize
unitholder value and unlock the company’s intrinsic value, while
eliminating execution risk. We are confident that this
transaction represents the best outcome for our unitholders and
other stakeholders and look forward to completing the
transaction.”
The purchase price of C$7.57 per unit represents an
approximately 38 percent premium to Crius Energy’s unit price of
C$5.48 as of market close on Feb. 6, 2019. In addition to the
purchase price, Crius Energy unitholders will receive Crius
Energy’s previously-declared distribution for the first quarter of
2019 in the amount of C$0.209 per unit for total consideration in
the amount of C$7.779 per unit. Under the definitive
agreement, Crius Energy has agreed not to declare any further
distributions prior to the closing.
“We are excited to have reached an agreement with Vistra, a
leading integrated power company serving approximately 2.9 million
customers with more than 40 GW of generation,” said Michael
Fallquist, Chief Executive Officer of Crius Energy.
“Partnered with Vistra, Crius Energy will be well-positioned to
continue providing our customers and strategic partners with
differentiated products and services.”
Transaction Highlights
- Strategic acquisition accelerating Vistra’s Midwest and
Northeast growth strategy via Crius Energy’s presence in 19 states
and the District of Columbia, selling both electricity and natural
gas products primarily to high value residential and small business
customers
- High degree of overlap with Vistra’s generation fleet;
approximately 11.6 TWhs of load acquired, improving Vistra’s match
of its generation to load profile to approximately 45 percent
- Establishes a platform for future growth, leveraging Vistra’s
existing retail marketing capabilities and Crius Energy’s
experienced team
- Enhances integrated value proposition through collateral and
transaction efficiencies, particularly via Crius Energy’s largely
residential portfolio
- Complements Vistra’s municipal aggregation and large commercial
and industrial portfolio acquired from Dynegy in April 2018 and
part of a broader organic expansion effort
- Approximately US$328 million purchase price (assuming an
exchange rate of US$0.76 for each C$1), which Vistra intends to
fund with cash on hand, plus assumption of Crius Energy net debt of
approximately US$108 million
- Attractive premium of 38 percent above Crius Energy’s Feb. 6,
2019 closing price paid to Crius Energy unitholders
- Acquisition economics exceed Vistra’s investment threshold of
mid-to-high teens unlevered returns; achieved only through the
expertise and scale of the Vistra retail business
- Tuck-in acquisition with no anticipated changes to Vistra’s
capital allocation or deleveraging plans
- Continued “focus on the customer” approach
- Unanimous recommendation of Crius Energy’s Independent
Directors in favor of the transaction, with voting and support
agreements representing approximately 17 percent of Crius Energy’s
units executed in support of the transaction
Transaction and Approvals
The proposed transaction has been structured as a sale of two
wholly owned subsidiaries of Crius Energy that indirectly own the
Crius Energy business. The definitive agreement includes
customary deal protections, including non-solicitation covenants,
the right of Vistra to match any competing proposals, and the
payment of a termination fee to Vistra under certain
circumstances.
The proposed transaction is subject to the approval of at least
two-thirds of Crius Energy’s unitholders. Unitholders of
Crius Energy representing approximately 17 percent of the units,
including all of the directors and senior officers of Crius Energy,
have entered into voting and support agreements with Vistra in
support of the transaction.
In addition to satisfying the closing conditions and consents
customary for a transaction of this nature, the transaction is also
subject to applicable regulatory approvals, including the
expiration or termination of any applicable waiting period under
the United States Hart-Scott-Rodino Antitrust Improvements Act, and
approval by the Federal Energy Regulatory Commission (FERC).
Pending the receipt of all necessary approvals and the
fulfillment of all other customary closing conditions, the parties
expect the transaction to close in the second quarter of 2019.
Additional Information
Vistra has posted a presentation with additional details of the
transaction on the investor relations section of its website at
www.vistraenergy.com.
Crius Energy will include the full details of the transaction in
a management information circular describing the matters that will
be considered at the special meeting of Crius Energy’s unitholders,
which is expected to be mailed in early March 2019. A copy of
the definitive agreement will also be made available on SEDAR under
Crius Energy’s issuer profile at www.sedar.com.
Crius Energy Board Recommendation
Crius Energy’s Board of Directors, on the unanimous
recommendation of its Independent Directors, approved the
transaction and will recommend that Crius Energy’s unitholders vote
in favor of the transaction. The Board received a fairness
opinion from Guggenheim Securities LLC determining that, based upon
and subject to the assumptions, limitations, and qualifications
stated in the opinion, the per unit consideration to be received by
Crius Energy’s unitholders under the transaction is fair, from a
financial point of view, to the unitholders.
A copy of the fairness opinion, which should be read carefully
and in its entirety, and other relevant background information,
will be included in the management information circular that will
be mailed to Crius Energy’s unitholders in connection with the
special meeting.
Advisors
Guggenheim Securities LLC is serving as financial advisor to
Crius Energy and Bennett Jones LLP and Baker Botts LLP are serving
as legal advisors to Crius Energy.
RBC Capital Markets is serving as financial advisor to Vistra
and Latham & Watkins, LLP is serving as legal advisor to
Vistra.
Company Contacts:
Allan KoenigVistra
Media214-875-8004Media.Relations@vistraenergy.com
Molly SorgVistra Investor Relations214-812-0046
Investor@vistraenergy.com
Michael FallquistCrius Energy Chief Executive
Officermfallquist@criusenergy.com(203) 663-7545
Roop BhullarCrius Energy Chief Financial
Officerrbhullar@criusenergy.com(203) 883-9900
Kelly CastledineCrius Energy Investor
Relationskcastledine@criusenergy.com(416) 644-1753
About Vistra Energy Vistra Energy (NYSE: VST)
is a premier, integrated power company based in Irving, Texas,
combining an innovative, customer-centric approach to retail with a
focus on safe, reliable, and efficient power generation. Through
its retail and generation businesses which include TXU Energy,
Homefield Energy, Dynegy, and Luminant, Vistra operates in 12
states and six of the seven competitive markets in the U.S., with
about 5,400 employees. Vistra’s retail brands serve approximately
2.9 million residential, commercial, and industrial customers
across five top retail states, and its generation fleet totals
approximately 41,000 megawatts of highly efficient generation
capacity, with a diverse portfolio of natural gas, nuclear, coal,
solar and battery storage facilities. The company is
currently developing the largest battery energy storage system of
its kind in the world – a 300-MW/1,200-MWh system in Moss Landing,
California.
About Crius Energy TrustWith approximately 1
million residential customer equivalents, Crius Energy provides
competitive electricity and natural gas products to residential and
commercial customers in 19 states and the District of Columbia in
the United States. The Company sells energy products through a
family of brands strategy utilizing a multi-channel sales approach
including exclusive partnerships, direct-to-consumer channels, and
broker marketing channels. Crius Energy offers consumers a broad
suite of energy products and services including fixed and variable
contracts, renewable energy, and bundled products to support their
energy needs beyond what is offered by their local utility.
Cautionary Note Regarding Forward-Looking
Statements Material information pertaining to Crius Energy
may be found on SEDAR under the Trust's issuer profile at
www.sedar.com or on the Trust's website at
www.criusenergytrust.ca.
The information presented herein includes forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements, which are
based on current expectations, estimates and projections about the
industry and markets in which Vistra Energy Corp. (“Vistra Energy”)
and Crius Energy Trust (“Crius Energy”) operate and beliefs of and
assumptions made by Vistra Energy’s and Crius Energy’s management,
involve risks and uncertainties, which are difficult to predict and
are not guarantees of future performance, that could significantly
affect the financial results of Vistra Energy or Crius Energy. The
definitive agreement contains conditions to closing and there is no
assurance that these conditions will be fulfilled prior to the
outside date provided therein. All statements, other than
statements of historical facts, that are presented herein, or in
response to questions or otherwise, that address activities, events
or developments that may occur in the future, including such
matters as activities related to our financial or operational
projections, projected synergy, value lever and net debt targets,
capital allocation, capital expenditures, liquidity, projected
Adjusted EBITDA to free cash flow conversion rate, dividend policy,
business strategy, competitive strengths, goals, future
acquisitions or dispositions, development or operation of power
generation assets, market and industry developments and the growth
of our businesses and operations (often, but not always, through
the use of words or phrases, or the negative variations of those
words or other comparable words of a future or forward-looking
nature, including, but not limited to, "intends," "plans," "will
likely," "unlikely," “believe,” "expect," “seek,” "anticipate,"
"estimate," “continue,” “will,” “shall,” "should," “could,” "may,"
“might,” “predict,” "project," “forecast,” "target," “potential,”
“forecast,” "goal," "objective," “guidance” and "outlook"), are
forward-looking statements. Readers are cautioned not to place
undue reliance on forward-looking statements. Although Vistra
Energy and Crius Energy believe that in making any such
forward-looking statement, Vistra Energy’s and Crius Energy’s
expectations are based on reasonable assumptions, any such
forward-looking statement involves uncertainties and risks that
could cause results to differ materially from those projected in or
implied by any such forward-looking statement, including but not
limited to adverse changes in general economic or market conditions
(including changes in interest rates) or changes in political
conditions or federal or state laws and regulations and the ability
of the parties to achieve all of the conditions to the closing in
order to consummate the transaction (including obtaining any
necessary regulatory approvals and Crius Energy unitholder approval
for the transaction).
Any forward-looking statement speaks only at the date on which
it is made, and except as may be required by law, neither Vistra
Energy nor Crius Energy will undertake any obligation to update any
forward-looking statement to reflect events or circumstances after
the date on which it is made or to reflect the occurrence of
unanticipated events. New factors emerge from time to time, and it
is not possible to predict all of them; nor can Vistra Energy or
Crius Energy assess the impact of each such factor or the extent to
which any factor, or combination of factors, may cause results to
differ materially from those contained in any forward-looking
statement.
Source: Crius Energy Trust
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