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Acquisition Advances Global Exports Strategy and Focus on Connecting Customers and Markets while Reducing Asian Carbon Intensity; Expected to be Immediately Accretive to Earnings Per Share
CALGARY, AB, July 5, 2022 – AltaGas Ltd. (“AltaGas” or the “Company”) (TSX: ALA) is pleased to announce the purchase of 25.97% equity ownership of Petrogas Energy Corp. (“Petrogas”) from Idemitsu Canada Corporation, a wholly owned subsidiary of Idemitsu Kosan Co., Ltd. (“Idemitsu”), for total cash considerations of C$285 million. The closing and effective date of the transaction is July 5, 2022, with AltaGas now owning 100% of Petrogas.
The transaction was principally funded with recycled capital from the recent sale of AltaGas’ non-operated interest in the Aitken Creek gas processing facility, as well as modest draws of short-term debt from the Company’s existing credit facilities, which have approximately $3 billion of estimated liquidity. AltaGas plans to later repay the modest draws on its credit facilities through the strong free cash flow growth from the asset base. The transaction is expected to be immediately accretive to normalized EPS through a reduction in net income applicable to non-controlling interests, with full-year run-rate accretion expected to be in excess of $0.10 per share. Following the transaction, Idemitsu will continue to represent an important partnership for AltaGas as a Global Exports offtake customer through the Astomos Energy Joint Venture. AltaGas and Idemitsu will also continue to evaluate future opportunities and collaborate on prospective energy transition projects as both organizations pursue various lower-carbon initiatives over the long-term.
“We are excited to take full ownership of Petrogas,” said Randy Crawford, President and Chief Executive Officer of AltaGas. “This transaction provides us the ability to further integrate and optimize our industry leading west coast export platform, solidifying our position as the leading provider of North American Liquified Petroleum Gases (LPGs) from the west coast. The transaction clearly demonstrates our ability to recycle capital into strategic growth opportunities and ensures that AltaGas is well-positioned to connect domestic customers with global markets in the most efficient manner. We will continue to develop the Petrogas assets and leverage its port and tidewater access to meet our domestic customers with global customers’ needs, including various energy transition opportunities that are aligned with North America and Asia’s long-term lower-carbon focus.”
The Petrogas acquisition, along with the planned sale of AltaGas’ Alaska Utilities that was announced in late May, is representative of the Company’s opportunistic capital recycling strategy to achieve corporate objectives and create long-term value for all stakeholders, as has been demonstrated over the past three years. The underlying earnings profile of the Petrogas assets is well-aligned with this objective and should deliver strong long-term value to AltaGas’ shareholders. AltaGas remains acutely focused on balancing the Company’s desire to advance its growth opportunities while reducing leverage ratios over the medium- to- long-term and increasing returns of capital to shareholders through steady and consistent dividend growth. AltaGas’ 2022 guidance remains unchanged with full year earnings contribution from the acquisition expected to be realized in 2023.
Burnet, Duckworth & Palmer LLP acted as legal counsel to AltaGas on the transaction. McCarthy Tétrault LLP acted as legal counsel and BMO Capital Markets acted as financial advisor to Idemitsu on the transaction.
AltaGas is a leading North American infrastructure company that connects customers and markets to affordable and reliable sources of energy. The Company operates a diversified, lower-risk, high-growth Utilities and Midstream business that is focused on delivering resilient and durable value for its stakeholders.
For more information visit www.altagas.ca or reach out to one of the following:
Senior Vice President, Investor Relations & Corporate Development
Director, Investor Relations
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