Unitil to Purchase Bangor Natural Gas Company from Hope Utilities, Inc.

Rhea-AI Summary

Unitil (NYSE: UTL) announced plans to acquire Bangor Natural Gas Company from Hope Utilities' subsidiary, PHC Utilities, for $70.9 million on a debt-free basis. The acquisition, which values Bangor at 1.2 times its rate base as of December 31, 2023, will make Bangor a wholly-owned subsidiary of Unitil upon completion. The transaction is expected to close by the end of Q1 2025, pending approval from the Maine Public Utilities Commission and other conditions.

Unitil plans to finance the purchase with a balanced mix of equity and debt, having secured committed debt financing from Scotiabank. Bangor, operational since 1998, serves approximately 8,500 customers with 351 miles of distribution pipelines and nine miles of transmission pipelines. The acquisition aims to enhance Unitil's natural gas distribution operations in Maine.

Positive

• Unitil's acquisition of Bangor Natural Gas Company for $70.9 million will expand its customer base by approximately 8,500.
• The acquisition values Bangor at 1.2 times its rate base, indicating a potentially favorable purchase price.
• Unitil has secured committed debt financing from Scotiabank, ensuring financial backing for the acquisition.
• The transaction is expected to enhance Unitil’s natural gas distribution operations in Maine, potentially increasing market presence and operational efficiency.

Negative

• The acquisition is subject to approval by the Maine Public Utilities Commission and other conditions, posing potential regulatory risks.
• Financing the acquisition with a mix of equity and debt could impact Unitil’s balance sheet and shareholder value.

Financial Analyst

The acquisition of Bangor Natural Gas Company by Unitil for $70.9 million is a significant move in the utility sector. The purchase price represents a multiple of approximately 1.2 times Bangor's rate base, which is generally considered a reasonable valuation in the utility industry. This indicates that Unitil is acquiring Bangor at a fair value, neither overpaying nor securing a bargain. For retail investors, this valuation metric is important as it suggests a balanced approach to growth without taking on excessive financial risk.

Unitil plans to finance this acquisition with a balanced mix of equity and debt, which will help maintain its strong balance sheet. Maintaining a strong balance sheet is a positive sign for investors as it indicates financial prudence and risk management. Moreover, securing committed debt financing from Scotiabank reduces the uncertainty around funding the transaction.

In the short term, investors might expect some fluctuation in Unitil's stock price due to the initial cost of acquisition and integration expenses. However, in the long term, this acquisition should enhance Unitil's market position in Maine, potentially leading to increased revenue and profitability as operational efficiencies are realized.

Market Research Analyst

The acquisition of Bangor Natural Gas Company will expand Unitil's customer base by approximately 8,500 customers and increase its pipeline infrastructure by 360 miles. This aligns with Unitil's strategy to consolidate its position in the New England energy market. By integrating Bangor's operations, Unitil could achieve significant economies of scale and operational synergies, which are critical for cost management and service improvement in the utility sector.

Additionally, Bangor's established presence and strong management team in Maine could provide Unitil with a stable and experienced workforce, facilitating a smoother integration process. From a market perspective, this acquisition strengthens Unitil's competitive position and could potentially lead to greater market share in the region.

For retail investors, the strategic expansion and potential for increased market share are positive indicators of future growth. However, it is essential to monitor how effectively Unitil integrates Bangor's operations and manages the associated costs.

HAMPTON, N.H., July 09, 2024 (GLOBE NEWSWIRE) -- Unitil Corporation (NYSE: UTL) (unitil.com) today announced that Unitil has agreed to purchase Bangor Natural Gas Company (“Bangor”) from PHC Utilities, Inc., a subsidiary of Hope Utilities, Inc., for $70.9 million on a debt-free basis, subject to customary adjustments for closing working capital and transaction expenses.   Bangor’s enterprise value represents a multiple of approximately 1.2 times its rate base (based on its estimated rate base as of December 31, 2023). Upon the closing of the transaction, which is expected to occur by the end of the first quarter of 2025, Bangor will become a wholly owned subsidiary of Unitil.   The transaction is subject to approval by the Maine Public Utilities Commission as well as other conditions to closing.

“Bangor Natural Gas Company is a great complement to our current natural gas distribution operations in Maine,” said Thomas P. Meissner, Jr., Unitil’s Chairman and Chief Executive Officer. “Bangor brings a strong management team that is committed to providing safe, clean, reliable, and affordable energy to customers. We share their dedication to serving communities in Maine by providing responsive, high-quality service through locally-managed operations.”

Bangor Natural Gas Company, which commenced operations in 1998, is a natural gas distribution company serving approximately 8,500 customers. Bangor owns and operates approximately 351 miles of distribution pipelines and nine miles of transmission pipelines.

Unitil plans to finance this transaction with a balanced mix of equity and debt to maintain its strong balance sheet, and has obtained committed debt financing from Scotiabank to fund the purchase price.

Unitil is being advised in this transaction by Scotiabank and by the law firm of Dentons.

About Unitil Corporation

Unitil Corporation provides energy for life by safely and reliably delivering electricity and natural gas in New England. We are committed to the communities we serve and to developing people, business practices, and technologies that lead to the delivery of dependable, more efficient energy. Unitil Corporation is a public utility holding company with operations in Maine, New Hampshire and Massachusetts. Together, Unitil’s operating utilities serve approximately 108,500 electric customers and 88,400 natural gas customers. For more information about our people, technologies, and community involvement please visit unitil.com.

Forward-Looking Statements

This press release contains forward-looking statements.  All statements, other than statements of historical fact, included in this press release are forward-looking statements.  Forward-looking statements include declarations regarding Unitil’s beliefs and current expectations. These forward-looking statements are subject to the inherent risks and uncertainties in predicting future results and conditions that could cause the actual results to differ materially from those projected in these forward-looking statements.  Some, but not all, of the risks and uncertainties include the following:  the ability of the parties to consummate the proposed purchase of Bangor in a timely manner or at all; the satisfaction of conditions precedent to consummation of the acquisition, including the ability to secure regulatory approvals; Unitil’s ability to successfully complete its anticipated debt financing arrangements; Unitil’s ability to successfully integrate Bangor; Unitil’s ability to retain Bangor’s management team and other employees; Unitil’s and Bangor’s regulatory environment (including regulations relating to climate change, greenhouse gas emissions and other environmental matters); fluctuations in the supply of, the demand for, and the prices of, energy commodities and transmission and transportation capacity and Unitil’s and Bangor’s ability to recover energy commodity costs in its rates; customers’ preferred energy sources; severe storms and Unitil’s and Bangor’s ability to recover storm costs in its rates; general economic conditions; variations in weather; long-term global climate change; unforeseen or changing circumstances, which could adversely affect the reduction of company-wide direct greenhouse gas emissions; Unitil’s and Bangor’s ability to retain its existing customers and attract new customers; increased competition; and other risks detailed in Unitil's filings with the Securities and Exchange Commission.  These forward looking statements speak only as of the date they are made.  Unitil undertakes no obligation, and does not intend, to update these forward-looking statements except as required by law.

For more information please contact:
Christopher Goulding – Investor Relations
Phone: 603-773-6466
Email: gouldingc@unitil.com 

Alec O’Meara – External Affairs
Phone: 603-773-6404
Email: omeara@unitil.com

FAQ

What is the acquisition value of Bangor Natural Gas Company by Unitil?

Unitil is acquiring Bangor Natural Gas Company for $70.9 million on a debt-free basis.

When is the expected closing date for Unitil's acquisition of Bangor Natural Gas Company?

The transaction is expected to close by the end of the first quarter of 2025, pending regulatory approval.

How will Unitil finance the acquisition of Bangor Natural Gas Company?

Unitil plans to finance the transaction with a balanced mix of equity and debt and has secured committed debt financing from Scotiabank.

How many customers does Bangor Natural Gas Company serve?

Bangor Natural Gas Company serves approximately 8,500 customers.

What regulatory approval is required for Unitil's acquisition of Bangor Natural Gas Company?

The acquisition requires approval from the Maine Public Utilities Commission.

How many miles of pipelines does Bangor Natural Gas Company operate?

Bangor operates approximately 351 miles of distribution pipelines and nine miles of transmission pipelines.

What is the rate base multiple for Bangor Natural Gas Company's acquisition?

The acquisition values Bangor Natural Gas Company at approximately 1.2 times its rate base.