IRVING, Texas, Feb. 20, 2019 /PRNewswire/ -- Vistra Energy
(NYSE: VST) and Crius Energy Trust (TSX: KWH.UN) have entered
into an amendment to their existing purchase agreement pursuant to
which Vistra has agreed to increase its acquisition price for Crius
Energy such that unitholders of Crius Energy will now receive
C$8.80 per trust unit, an increase of
C$1.23 per trust unit from the
parties' prior agreement. The purchase price is in addition
to Crius Energy's previously-declared C$0.209 per unit distribution for the first
quarter of 2019.
Vistra and Crius Energy negotiated the amendment in response to
the receipt by the Crius Energy Board of Directors of an
unsolicited acquisition proposal from a third party bidder dated
Feb. 14, 2019 that was higher than
the purchase price previously agreed by Vistra and Crius
Energy. Vistra's management and Board of Directors carefully
reviewed the terms of the third party acquisition proposal and
determined that the Crius Energy transaction remained attractive
and accretive at the new price of C$8.80 per trust unit, or approximately
US$378 million plus the assumption of
Crius Energy net debt of approximately US$108 million.
Curt Morgan, Vistra's president
and chief executive officer, stated, "Vistra's decision to increase
the purchase price for the Crius Energy portfolio came after a
careful evaluation of the economics of the transaction. At a
purchase price of approximately 4x EV/EBITDA, this transaction is
still projected to be EBITDA and free cash flow accretive and to
exceed Vistra's investment threshold of 500-600 basis points above
our cost of capital, while not interfering with Vistra's previously
announced capital allocation and deleveraging plans."
Morgan added, "Since we first announced the transaction with
Crius Energy on Feb. 7, our teams
have had the opportunity to continue diligence work, which has only
reinforced Vistra's confidence in the strategic and cultural fit of
the two organizations, as well as our ability to achieve the
synergy targets we previously announced. As a result, the
Vistra management team and Board of Directors agreed it would be in
the best interest of Vistra and its shareholders to pursue the
Crius Energy transaction at a higher price, enabling Vistra to
acquire this attractive platform while still remaining disciplined
on the overall deal economics."
Brian Burden, chairman of Crius
Energy's Board of Directors, commented, "After receiving an
unsolicited third-party acquisition proposal reflecting a higher
per-unit purchase price for Crius Energy, the Crius Energy
management team and Board of Directors advised Vistra of the
proposal, which led to subsequent discussions. Following
these discussions, our Board unanimously approved the amendment to
the purchase agreement, which reflects an increase in proceeds to
Crius Energy unitholders of more than C$1 per unit, which is higher than the
unsolicited third-party acquisition proposal received by the
Board. At an approximately 60 percent premium to Crius
Energy's unit price as of market close on Feb. 6, 2019, we believe the proposed transaction
with Vistra, as amended, is in the best interest of the Crius
Energy unitholders, customers, and employees, and Crius Energy's
Independent Directors and Board unanimously support the
transaction."
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 consistent with Vistra's industry-leading
retail capabilities
- 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
- 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 and ownership of
complementary generation assets
- Attractive premium of approximately 60 percent above Crius
Energy's Feb. 6, 2019 closing price
to be received by Crius Energy unitholders under the proposed
transaction
- Tuck-in acquisition with no anticipated changes to Vistra's
capital allocation or deleveraging plans
- Continued "focus on the customer" approach enhancing Vistra's
stable earnings and cash flow in a risk-reducing manner
- 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 definitive agreement (as amended) 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. In the
amendment, in consideration for the increased purchase price, the
parties agreed to increase the termination fee payable to Vistra
under the agreement to C$25.1 million
from C$10.4 million, together with a
corresponding increase in the reverse termination fee payable to
Crius Energy under the agreement.
In addition to the C$8.80 per
trust unit to be received by Crius Energy unitholders under the
proposed transaction, Crius Energy unitholders will also continue
to be entitled to receive Crius Energy's C$0.209 per unit distribution for the first
quarter of 2019 previously declared on Jan.
16, 2019, resulting in total consideration in the amount of
C$9.009 per unit. The declared
distribution was amended on Feb. 15,
2019 such that (a) the distribution record date will be
Mar. 26, 2019, and (b) the
distribution payment date will be the earlier of June 17, 2019 and the closing date of the
transaction. Under the definitive agreement, Crius Energy has
agreed not to declare any further distributions prior to the
closing.
The proposed transaction is subject to the approval of at least
two-thirds of Crius Energy's unitholders voting at the special
unitholder meeting scheduled for March
28, 2019. Unitholders of Crius Energy representing
approximately 17 percent of the units, including all of the
directors and senior officers of Crius Energy, previously entered
into voting and support agreements with Vistra in support of the
transaction (including as amended).
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 (HSR) Improvements
Act, and approval by the Federal Energy Regulatory Commission
(FERC). Vistra and Crius Energy made the HSR and FERC filings
on Feb. 19, 2019.
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 has been, and a copy of the amendment will 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 the related amendment, 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 revised
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 Koenig
Vistra Media
214-875-8004
Media.Relations@vistraenergy.com
Molly Sorg
Vistra Investor Relations
214-812-0046
Investor@vistraenergy.com
Michael Fallquist
Crius Energy Chief Executive Officer
mfallquist@criusenergy.com
(203) 663-7545
Roop Bhullar
Crius Energy Chief Financial Officer
rbhullar@criusenergy.com
(203) 883-9900
Kelly Castledine
Crius Energy Investor Relations
kcastledine@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 Trust
With 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.
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SOURCE Vistra Energy