- Blackstone Infrastructure Partners affiliate agrees to acquire
19.9% non-controlling equity interest in NIPSCO for $2.150 Billion, with additional equity commitment
of $250 million to fund ongoing
capital requirements.
- Blackstone invests alongside NiSource in NIPSCO to fund the
energy transition and accelerate the reindustrialization of the
Midwest.
- NiSource reaffirms commitment to Indiana and to its consolidated credit,
earnings and growth commitments through 2027.
MERRILLVILLE, Ind., June 20,
2023 /PRNewswire/ -- NiSource Inc. (NYSE: NI) today
announced that it has entered into a definitive agreement with an
affiliate of Blackstone Infrastructure Partners, Blackstone's
(NYSE: BX) dedicated Infrastructure group, for the Blackstone
Infrastructure affiliate to acquire a 19.9% equity interest in
NIPSCO for $2.150 billion.
Blackstone Infrastructure is an active perpetual capital
investor across the utility, energy transition, transportation,
digital infrastructure, water and waste infrastructure sectors.
Blackstone Infrastructure seeks to apply a long-term buy-and-hold
approach to large-scale infrastructure assets and is focused on
responsible stewardship and stakeholder engagement to create value
for its investors and the communities it serves. Blackstone
Infrastructure is committed to investing behind NIPSCO's energy
transition and decarbonization programs, as well as helping to
increase gas and electric grid resiliency for the customers of
Indiana.
The transaction is a highly attractive and efficient form of
equity financing. NiSource intends to use the capital infusion to
support its fastest growing utility and its ability to serve
customers, de-lever its balance sheet and fund ongoing capital
needs associated with the renewable generation transition underway.
Since 2018, NIPSCO has been executing on one of the fastest
transitions from coal-fired electricity in the U.S. utilities
sector, targeting 0% coal-fired generation mix by 2028 (compared to
75% coal generation mix in 2018). Through 2030, NIPSCO expects to
invest approximately $3.5 billion in
electric generation transition investments, with this investment
primarily focused on installing new renewable generation to replace
coal-fired generation retirements. NIPSCO also intends to support
the continued growth and modernization of its gas and electric
transmission and distribution systems, which will play critical
roles in the energy transition as NIPSCO continues to deliver a
reliable, diverse and sustainable energy mix, bringing customer,
environmental and economic benefits.
The transaction implies an equity value of $10.8 billion and enterprise value of
$14.3 billion for 100% of NIPSCO.
Upon closing of the transaction, which is expected by the end of
2023, NIPSCO will remain a vital part of NiSource, which will
retain an 80.1% stake in NIPSCO. NiSource will continue to operate
NIPSCO; Blackstone will receive minority rights that are
commensurate with its 19.9% equity ownership interest. As part of
the transaction, Blackstone is committed to funding its pro rata
share of ongoing capital requirements, which is supported by a
$250 million equity commitment letter
and contractual obligations.
"We're pleased to reach this agreement at a compelling valuation
following a robust and competitive process and are confident that
Blackstone is the right partner for NIPSCO and NiSource going
forward, given its global footprint and deep infrastructure
experience, including in renewable development and procurement,"
said NiSource president and CEO Lloyd
Yates. "With this transaction, our commitment to
Indiana remains unchanged, and we
will be able to drive further sustainable growth for our
stakeholders. This financing transaction will have no impact on
NIPSCO's current strategic direction or on our commitment to our
gas and electric customers in Indiana."
"This agreement underscores Blackstone's commitment to
decarbonization to create value for our investors and our desire to
help facilitate the reindustrialization of the Midwest," said
Sean Klimczak, Global Head of
Infrastructure, Blackstone. "Our belief in Indiana remains steadfast and we are excited
to partner with NiSource and NIPSCO, one of the fastest growing
utilities in the country, to support the vital role that NIPSCO
plays in communities across Northern
Indiana."
"This transaction is a significant step in our execution against
our strategy, and the progress we are making to create value for
all of our stakeholders as we continue to navigate the current
challenging interest rate backdrop," said Shawn Anderson, NiSource's executive vice
president and CFO. "We are confident this is the right path forward
to strengthen our balance sheet, support our financing plan and
provide greater flexibility to execute on high-quality capital
investments that will enhance the safety, reliability and
sustainability of our systems for the benefit of our
customers."
NIPSCO is Indiana's largest
vertically integrated electric and gas distribution company,
providing critical utility service to almost 1.3 million customers
in an economically robust service territory, with a proven track
record of providing value for its customers. NIPSCO is at the
forefront of the energy transition and is developing one of the
lowest-cost portfolios of renewable energy projects, the majority
of which are utility-owned, and intends to retire all coal-fired
generation by the end of 2028. These near-term renewable and
generation transition investments add to a multi-decade capital
plan with the goal to significantly grow NIPSCO's rate base through
investments across gas, electric transmission and distribution and
electric generation, which should drive significant continued value
for NIPSCO's customers. NIPSCO operates in Indiana, one of the most constructive utility
jurisdictions in the United
States, with strong support for utility-owned generation and
affordable energy, and a strong economic service territory
benefitting from on-shoring and migration trends as well as robust
development.
Mike Hooper, president and chief
operating officer of NIPSCO said, "This partnership with Blackstone
is a reflection of NIPSCO's potential as an industry leader as we
continue to meet the increasing and evolving needs of our gas and
electric customers across Northern
Indiana. Once completed, this transaction will also
strengthen our ability to invest in major renewable generation
projects and make capital enhancements to existing electric and gas
infrastructure to add resiliency to our system. We will be better
positioned than ever to provide safe, reliable and diverse sources
of energy to our customers and support the future growth and
development of the communities we are privileged to serve."
Sebastien Sherman, Senior
Managing Director, Blackstone
Infrastructure, said, "We are excited to invest behind
NIPSCO, which is leading the transformation of energy
infrastructure in the U.S., advancing new, cleaner technologies and
building increasingly advanced systems to meet customer needs. They
are at the forefront of the transition to low-cost renewable energy
and have one of the nation's fastest decarbonization plans."
The transaction is expected to close by year-end 2023, subject
to customary closing conditions, including receiving FERC approvals
and clearances.
Reaffirming 2023 and Long-term Earnings Guidance
NiSource also reaffirmed its non-GAAP NOEPS guidance of
$1.54 to $1.60 in 2023, growth of 6-8% through 2027 and
its FFO/debt target of 14-16%. Annual rate base growth of 8-10% is
driven by $15 billion of planned
capital expenditures during the 2023-2027 period.
NiSource reminds investors that it does not provide a GAAP
equivalent of its earnings guidance due to the impact of
unpredictable factors such as fluctuations in weather and other
unusual and infrequent items included in GAAP results.
Advisors
Lazard Frères & Co. LLC is serving as lead financial
advisor, Goldman Sachs & Co. LLC is serving as co-financial
advisor and McGuireWoods LLP is serving as legal counsel to
NiSource. Barclays is serving as financial advisor and Latham &
Watkins LLP is serving as legal counsel to Blackstone. Sumitomo
Mitsui Banking Corporation provided committed financing for the
transaction.
Investor Conference Call and Webcast Details
NiSource will host a conference call at 8
a.m. ET (7 a.m. CT) on
Tuesday, June 20, 2023, to discuss
the transaction and related information and to answer
questions.
All interested parties may listen to the conference call live on
June 20 by logging onto the NiSource
website at www.nisource.com. A link on the home page will provide
access to the webcast, the press release and the additional
information. Interested parties also may listen to the conference
call toll-free by calling (888) 550-5438 and entering conference ID
4883153, or by calling (646) 960-0817 and entering the same
conference ID 4883153.
A replay of the call will be available through 11:59 p.m. ET on June 27,
2023. A recording of the call will also be archived on the
NiSource website.
Additional information regarding the transaction, NiSource's
2023 and long-term earnings guidance and other relevant
information, will be available on the Investors section of
www.nisource.com prior to the June 20,
2023, conference call.
About NiSource
NiSource Inc. (NYSE: NI) is one of the largest fully regulated
utility companies in the United
States, serving approximately 3.3 million natural gas
customers and 500,000 electric customers across six states through
its local Columbia Gas and NIPSCO brands. The mission of our
approximately 7,200 employees is to deliver safe, reliable energy
that drives value to our customers. NiSource is a member of the Dow
Jones Sustainability - North America Index and is on Forbes lists
of America's Best Employers for Women and Diversity. Learn more
about NiSource's record of leadership in sustainability,
investments in the communities it serves and how we live our vision
to be an innovative and trusted energy partner at www.NiSource.com.
NI-F
About Blackstone
Blackstone is the world's largest alternative asset manager. We
seek to create positive economic impact and long-term value for our
investors, the companies we invest in, and the communities in which
we work. We do this by using extraordinary people and flexible
capital to help companies solve problems. Our $991 billion in assets under management include
investment vehicles focused on private equity, real estate, private
and liquid credit, infrastructure, life sciences, growth equity,
public securities and secondary funds, all on a global
basis. Further information is available at www.blackstone.com.
Follow @blackstone on LinkedIn, Twitter, and Instagram.
Forward-Looking Statements
This release contains "forward-looking statements," within the
meaning of Section 27A of the Securities Act of 1933, as amended
(the "Securities Act"), and Section 21E of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). Forward-looking
statements in this release include any statements regarding the
ability to complete the Transaction on the anticipated timeline or
at all; the anticipated benefits of the Transaction if completed;
the projected impact of the Transactions on our performance or
opportunities; any statements regarding our expectations, beliefs,
plans, objectives or prospects or future performance or financial
condition as a result of or in connection with the Transaction;
statements concerning our plans, strategies, objectives, expected
performance, expenditures, recovery of expenditures through rates,
stated on either a consolidated or segment basis; and any and all
underlying assumptions and other statements that are other than
statements of historical fact. Investors and prospective
investors should understand that many factors govern whether any
forward-looking statement contained herein will be or can be
realized. Any one of those factors could cause actual results to
differ materially from those projected. Expressions of future goals
and expectations and similar expressions, including "may," "will,"
"should," "could," "would," "aims," "seeks," "expects," "plans,"
"anticipates," "intends," "believes," "estimates," "predicts,"
"potential," "targets," "forecast," and "continue," reflecting
something other than historical fact are intended to identify
forward-looking statements. All forward-looking statements are
based on assumptions that management believes to be reasonable;
however, there can be no assurance that actual results will not
differ materially. Factors that could cause actual results to
differ materially from the projections, forecasts, estimates and
expectations discussed in this release include, but are not limited
to, risks and uncertainties relating to the timing and certainty of
closing the Transaction; the ability to satisfy the conditions to
closing the Transaction, including the ability to obtain FERC
approval necessary to complete the Transaction; the ability to
achieve the anticipated benefits of the Transaction; the effect of
this communication on NiSource's stock price; the effects of
transaction costs; the effects of the Transaction on industry,
market, economic, political or regulatory conditions outside of
NiSource's control; any disruption to NiSource's business from the
Transaction, including the diversion of management time on
Transaction-related issues, our ability to execute our business
plan or growth strategy, including utility infrastructure
investments; potential incidents and other operating risks
associated with our business; our ability to adapt to, and manage
costs related to advances in technology; impacts related to our
aging infrastructure; our ability to obtain sufficient insurance
coverage and whether such coverage will protect us against
significant losses; the success of our electric generation
strategy; construction risks and natural gas costs and supply
risks; fluctuations in demand from residential and commercial
customers; fluctuations in the price of energy commodities and
related transportation costs or an inability to obtain an adequate,
reliable and cost-effective fuel supply to meet customer demands;
the attraction and retention of a qualified, diverse workforce and
ability to maintain good labor relations; our ability to manage new
initiatives and organizational changes; the actions of activist
stockholders; the performance of third-party suppliers and service
providers; potential cybersecurity attacks; increased requirements
and costs related to cybersecurity; any damage to our reputation;
any remaining liabilities or impact related to the sale of the
Massachusetts Business; the impacts of natural disasters, potential
terrorist attacks or other catastrophic events; the physical
impacts of climate change and the transition to a lower carbon
future; our ability to manage the financial and operational risks
related to achieving our carbon emission reduction goals, including
our Net Zero Goal; our debt obligations; any changes to our credit
rating or the credit rating of certain of our subsidiaries; any
adverse effects related to our equity units; adverse economic and
capital market conditions or increases in interest rates;
inflation; recessions; economic regulation and the impact of
regulatory rate reviews; our ability to obtain expected financial
or regulatory outcomes; continuing and potential future impacts
from the COVID-19 pandemic; economic conditions in certain
industries; the reliability of customers and suppliers to fulfill
their payment and contractual obligations; the ability of our
subsidiaries to generate cash; pension funding obligations;
potential impairments of goodwill; the outcome of legal and
regulatory proceedings, investigations, incidents, claims and
litigation; potential remaining liabilities related to the Greater
Lawrence Incident; compliance with the agreements entered into with
the U.S. Attorney's Office to settle the U.S. Attorney's Office's
investigation relating to the Greater Lawrence Incident; compliance
with applicable laws, regulations and tariffs; compliance with
environmental laws and the costs of associated liabilities; changes
in taxation; and other matters set forth in Item 1, "Business,"
Item 1A, "Risk Factors" and Part II, Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of
Operations," of our Annual Report on Form 10-K for the fiscal year
ended December 31, 2022, and our
Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 2023, some of which risks
are beyond our control.
All forward-looking statements are expressly qualified in their
entirety by the foregoing cautionary statements. We undertake no
obligation to, and expressly disclaim any such obligation to,
update or revise any forward-looking statements to reflect changed
assumptions, the occurrence of anticipated or unanticipated events
or changes to the future results over time or otherwise, except as
required by law.
Regulation G Disclosure Statement
This press release includes financial results and guidance for
NiSource with respect to net operating earnings available to common
shareholders, diluted earnings per share, and funds from
operations/debt, which are non-GAAP financial measures as defined
by the SEC's Regulation G. The company includes these measures
because management believes they permit investors to view the
company's performance using the same tools that management uses and
to better evaluate the company's ongoing business performance. With
respect to such guidance, it should be noted that there will likely
be a difference between these measures and their GAAP equivalents
due to various factors, including, but not limited to, fluctuations
in weather, the impact of asset sales and impairments, and other
unusual or infrequent items included in GAAP results. The company
is not able to estimate the impact of such factors on their GAAP
equivalents and, as such, is not providing such guidance on a GAAP
basis. In addition, the company is not able to provide a
reconciliation of its non-GAAP net operating earnings guidance or
its funds from operations/debt guidance to their GAAP equivalent
without unreasonable efforts.
View original content to download
multimedia:https://www.prnewswire.com/news-releases/nisource-announces-agreement-to-sell-minority-equity-interest-in-nipsco-to-strengthen-financial-foundation-and-support-sustainable-long-term-growth-301855173.html
SOURCE NiSource Inc.