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Dec 15 (Reuters) – Southwest Gasoline Holdings Inc (SWX.N) will promote its MountainWest Pipelines enterprise to Williams Firms Inc (WMB.N) for $1.07 billion, months after settling a bitter battle with activist investor Carl Icahn.
Las Vegas, Nevada-based Southwest additionally confirmed on Thursday it’s going to spin off Centuri, its utility infrastructure companies enterprise, a choice it first introduced in March.
Southwest had purchased MountainWest, previously generally known as Questar Pipelines, from Dominion Power (D.N) for almost $2 billion together with debt final yr. The acquisition had sparked a months-long proxy conflict between Icahn and Southwest that finally settled with the ousting of former chief government John Hester and three board seats being awarded to Icahn-appointed administrators in Could.
Icahn had mentioned the Questar deal hurts shareholders and referred to Hester and his administration workforce as “a great liability“.
The corporate is weighing a number of choices to recapitalize Centuri for the spin-off, it mentioned throughout a name discussing the offers. Choices embody fairness or debt issuance, a Centuri stake sale, or a sponsor for the spin-off. Southwest expects the separation to take a couple of yr.
Shares of Southwest had been down about 6% in mid-day buying and selling.
“A big chunk of fairness is among the choices on the desk,” mentioned Siebert Williams Shank analyst Chris Ellinghaus in a name with Reuters.
“And that places traders on the defensive after they know there is a doable fairness sale to return.”
Southwest will use proceeds from the MountainWest sale, anticipated to shut subsequent yr, to repay its time period mortgage of about $1.1 billion, and can take an estimated lack of $350 million to $425 million on the sale, web of tax.
Williams will assume $430 million of MountainWest’s debt as a part of the deal.
Reporting by Ruhi Soni, Extra Reporting by Ankit Kumar in Bengaluru; Enhancing by Vinay Dwivedi and Krishna Chandra Eluri
Our Requirements: The Thomson Reuters Trust Principles.
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