Opinion

Energy Infrastructure Company Closes 'Transformational' Acquisition


An iASecurities report discussed the benefits of the merger and next steps for the acquirer.

Pipes

A July 9 iA Securities research note indicated that AltaGas Ltd. (ALA:TSX) closed its CA$9 billion deal with WGL Holdings and iASecurities raised its per share target price on Buy rated AltaGas to CA$30 from CA$29. The current share price is about CA$28.19. "This highly anticipated transaction is material as it essentially doubles the company's enterprise value and provides investors with additional exposure to power, utilities and midstream assets in the United States," wrote analyst Elias Foscolos.

Per the acquisition agreement, AltaGas issued CA$2.5 billion in equity, Foscolos explained. It did so through conversion of outstanding installment receipts into 80 million shares and through a bridge loan of CA$2.3 billion.

The company intends to reduce the bridge financing by issuing about CA$0.98 billion of hybrid/preferred securities and by divesting about CA$1.4 billion in assets. The sale of assets and the hybrid financing are the next catalysts for the company, the announcement of which "we believe equity investors will be eagerly anticipating," Foscolos commented.

With the closing of the WGL transaction, AltaGas "is a transformed company," Foscolos noted and explained why.

One, it becomes a more U.S.-focused, lower-risk company with an estimated 70%-plus of EBITDA to originate in the States. Only 10–15% of 2019 EBITDA will be exposed to short-term commodity prices. Medium- and long-term agreements will support about 80% of AltaGas' 2019 EBITDA.

Two, the merger provides the company with a large project pipeline. By incorporating WGL's midstream franchise in the Marcellus/Utica Basin, AltaGas will boost its CA$2 billion of internal growth capital projects to CA$5.8 billion.

Three, the transaction increases AltaGas' common equity valuation by roughly CA$2.2 billion, thereby increasing its market cap, too.

Also noteworthy, Foscolos said, is that adjusted funds from operations are expected to grow by about 10% through 2020, which could support a larger dividend. In fact, AltaGas is targeting an 8–10% dividend increase.

Moving forward, AltaGas "still needs to execute on a number of fronts," Foscolos indicated. It must integrate WGL into its company. It must divest of CA$1.4 billion of assets, which "could be more challenging." If it cannot do this, it plans to make up any difference by issuing debt. Lastly, the company must close the CA$0.98 billion hybrid financing.


Visit source site

https://streetwisereports.com/article/2018/07/10/e...

Streetwise ReportsAcquisitioniA SecuritiesAltaGasTSX

More items from oilvoice


Husky Energy Provides Update on White Rose

Production remains shut in at the  SeaRose  floating production, storage and offloading (FPSO) vessel with all production wells secure after a period of extreme weather and an oil release late last week. Husky Energy (TSX:HSE) had shut in production at the White Rose field Thursday, November 15 du ...

OilVoice Press - OilVoice


Posted 3 hours agoPress > Husky EnergyTSXWhite Rose +4

Equinor - Ex Dividend Oslo Stock Exchange

From 21 November 2018, the shares in Equinor (OSE: EQNR; NYSE: EQNR) at Oslo Stock Exchange (Oslo Børs) will be traded ex dividend USD 0.23. Record date is 22 November 2018. This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Tradi ...

OilVoice Press - OilVoice


Posted 3 hours agoPress > Equinor EnergyEquinorOSE +1

Gazprom and CNPC Hold 14th Meeting of Joint Coordinating Committee

The 14 th meeting of the Joint Coordinating Committee (JCC) of Gazprom and CNPC moderated by  Vitaly Markelov , Deputy Chairman of the Gazprom Management Committee, and Hou Qijun, Vice President of CNPC, took place today in Guangzhou, People's Republic of China. The meeting participants discussed ...

OilVoice Press - OilVoice


Posted 3 hours agoPress > RussiaChinaSiberia +3

Equinor - Ex Dividend New York Stock Exchange

From 20 November 2018, American Depository Receipts (ADRs) in Equinor (NYSE: EQNR; OSE: EQNR) listed at New York Stock Exchange will be traded ex dividend USD 0.23. Record date is 21 November 2018. This information is subject to the disclosure requirements pursuant to section 5-12 of the No ...

OilVoice Press - OilVoice


Posted 3 hours agoPress > Equinor EnergyEquinorNYSE +1

Translating the Mindset of Peak Oil to Peak Gold

The Mercenary Geologist Mickey Fulp discusses with Maurice Jackson of Proven and Probable how peak oil could inform investment in gold miners. Maurice Jackson: Joining us for a conversation is the Mercenary Geologist, Mickey Fulp. Pleasure to speak with you. Mickey Fulp: Thank you, sir. ...

OilVoice Press - OilVoice


Posted 3 hours agoOpinion > OilPeak OilStreetwise Reports
All posts from oilvoice