Southwest Gas offers $400M in common stock to fund Questar deal | SWX Message Board Posts


Southwest Gas Corporation

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Msg  72 of 86  at  3/31/2022 1:09:45 PM  by

jerrykrause


Southwest Gas offers $400M in common stock to fund Questar deal

from SNL Energy Finance Daily
 
 

Southwest Gas offers $400M in common stock to fund Questar deal

 
 
Byline: Tom DiChristopher
 
 

Southwest Gas Holdings Inc. took a step toward permanently financing its nearly $2 billion acquisition of Dominion Energy Inc.'s Questar Pipelines business with a move long opposed by activist investor Carl Icahn.

Southwest Gas announced March 28 that it had launched a public offering of $400 million in shares of its common stock through underwriters. The company intends to use the offering's proceeds to repay outstanding borrowings under a $1.6 billion, 364-day term loan, which provided interim financing for the Questar purchase.

At the time of the acquisition, Southwest Gas said it intended to finance the deal with $900 million to $1 billion in equity. After announcing a plan to raise capital by separating the company's unregulated Centuri Group Inc. business, executives said they may have more flexibility to issue less equity while maintaining Southwest Gas' credit metrics.

Southwest Gas said it expects to grant the underwriters an option to purchase up to $60 million of common stock. JPMorgan Chase & Co. and BofA Securities Inc. are the joint bookrunning managers, or lead underwriters, for the offering. Lazard Freres & Co. LLC is financial adviser to Southwest Gas.

Icahn, who is seeking to take control of Southwest Gas through a tender offer and proxy battle, opposed both the Questar acquisition and financing it through equity issuances. He offered to fully finance the equity portion of the deal himself, but Southwest Gas rejected his offer.

Earlier on March 28, Southwest Gas dismissed the financing offer as "yet another tactic to try to disrupt the operations of the company and take control of the company at the expense of other stockholders."

In a March 28 letter to Southwest Gas stockholders, Icahn said he would purchase the full $400 million offering at $82.50 per share. The offer is contingent on Southwest Gas eliminating a poison pill, a plan that its board adopted to prevent Icahn from amassing a controlling stake in the company.

 


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