RAPID CITY, S.D., - Black Hills Corp. (NYSE: BKH) today announced it has completed the $940 million cash purchase of five Aquila Inc. utilities in four states. Black Hills acquired Aquila's electric utility in Colorado and Aquila's four natural gas utilities in Colorado, Iowa, Kansas and Nebraska.
The $940 million purchase price, subject to final closing adjustments, was financed through a $380 million borrowing on the company's $1 billion acquisition facility and cash proceeds from the July 11 sale of seven independent power production facilities as further outlined below.
In order to prepare to serve more than 600,000 additional customers, Black Hills hired approximately 200 new employees in Colorado, Nebraska and South Dakota. Approximately 1,050 current Aquila employees from the five utilities join Black Hills, bringing the total company's number of employees to 2,200.
"This acquisition is an important milestone in our strategic plan," said David R. Emery, chairman, president and chief executive officer of Black Hills Corp. "With this transaction, the company is building a platform for growth based on a foundation of stable cash flow, more predictable earnings and increased efficiencies. It complements the company's existing businesses and substantially broadens Black Hills' regional presence and utility operations.
"The Aquila transaction more than doubles the number of Black Hills employees and increases our utility customer base five-fold. We welcome these new employees and look forward to serving our new customers. I am extremely proud of the Aquila and Black Hills employees and thank them for their hard work and dedication. Their extra efforts have created a successful transition in addition to keeping all of our businesses performing well. We look forward to our future and remain committed to improving life with energy in the communities where we live and serve."
The acquired Aquila utilities will operate under the name "Black Hills Energy." In the coming months, the company's trucks, signs and customer bills will be branded with the new name. More information will be available in future communications.
Customers will continue to receive the same trusted coverage and service they have come to depend on. They will benefit from enhancements to programs and services, including service from Aquila's Lincoln, Neb., call center and a new call center operating in Rapid City.
Black Hills on Feb. 7, 2007, announced its intent to acquire the four Aquila gas utilities and one electric utility and began an extensive approval process. Black Hills' purchase of these assets was cross-contingent with the merger of Great Plains Energy and Aquila. The Missouri Public Service Commission on July 1 issued the order granting the final regulatory approval needed to complete the transaction, and the order became effective today. All three companies' boards of directors approved the asset purchase/sale and merger agreements, as did shareholders of Aquila and Great Plains Energy, the company purchasing Aquila's Missouri assets. The transaction also received approvals from state regulatory commissions in the four other states involved in the sale and the Federal Energy Regulatory Commission, and passed Hart-Scott-Rodino antitrust review.
The pre-tax net cash proceeds received upon the close of the IPP sale were approximately $756 million, including the effects of approximately $67.5 million of associated project level debt repayment, estimated working capital adjustments and other costs. Additionally, the company expects to make income tax payments associated with the gain on the IPP asset sale of approximately $50 million to $75 million. Through tax planning, the company expects to defer tax payments in the range of $135 million to $160 million. The pre-tax book gain on the IPP sale is in the range of $225 million to $250 million.
Black Hills Corporation is a diversified energy company with a tradition of exemplary service and a vision to be the energy partner of choice. The company serves 750,000 utility customers in Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming. The non-regulated business unit generates electricity, produces natural gas, oil and coal, and markets energy. We partner to produce results that improve life with energy. Learn more at blackhillscorp.com.