On March 28, the Louisiana Public Service Commission (LPSC) approved (Docket No. U-33434) the sale of Cleco Corporation, the parent of regulated electric utility Cleco Power, to a group of North American infrastructure investors led by Macquarie Infrastructure and Real Assets (MIRA) and British Columbia Investment Management Corporation (bcIMC), with John Hancock Financial and other infrastructure investors (collectively, the investor group) for $4.9 billion.
The transaction is expected to officially close in April 2016. The transfer of ownership will mean that Cleco Power will be owned by a group of institutional investors instead of public shareholders, but will not substantially change Cleco Power’s existing organization or structures.
The March 28 decision represents the results of Cleco’s second attempt to get the deal approved. On February 24, the commission had rejected a $4.7 billion proposal for ownership and control, agreeing that it was “not in the public interest.” On March 7, the applicants submitted a motion for immediate rehearing and reconsideration, saying “If this motion is not taken up at the March 16 Business & Executive Session, applicants will suffer immediate and irreparable harm.”
Under the new settlement, Cleco will remain headquartered in Pineville and retain local management and existing headcount. In addition, customers will receive approximately $500 on average in rate credits, and Cleco has agreed to extend its current formula rate plan and base rates for an additional two years. Cleco will file a rate case by June 2019 for a new formula rate plan effective July 2020.
As a result of the transaction, Cleco will operate under a set of commitments that extend its charitable and economic development funding, prolong existing employee and retiree benefits, maintain its financial integrity, increase Louisiana representation on its board of directors; and ensure safe, reliable electric utility service and efficient operations.
“We are committed to ensuring that Cleco remains a strong, locally-based utility in the years ahead and are appreciative that the LPSC voted to approve this sale,” said Andrew Chapman, senior managing director of MIRA. “We are confident that the utility will continue to provide reliable, high-level service to customers, the community and to the region. This is a valuable investment for our group.”
Cleco will continue to operate under the jurisdiction of the LPSC with assurances that strengthen the LPSC’s oversight and enforcement rights over the transaction’s commitments.
Under the terms of the merger agreement announced on Oct. 20, 2014, the new owners will acquire all outstanding shares of Cleco Corporation for $55.37 per share, a 15 percent premium to the closing price on the trading day prior to the day of the transaction’s announcement, in cash following the closing of the transaction.