Calgary’s Enmax to buy Maine electrical system for US$1.3B

Image: JWN

City of Calgary-owned electrical utility Enmax is acquiring transmission and distribution operations on the U.S. East Coast.

The company has agreed to purchase Emera Maine, a unit of Emera Inc., for total consideration of US$1.3 billion.

The arrangement provides for Nova Scotia-based Emera to fully achieve its previously announced asset sale targets, according to a statement.

Enmax said the deal reflects its strategy to grow through the expansion of its regulated utility business in North America.

The company said it will increase its regulated rate base assets by 50 percent, or C$900 million.

Following the announcement, credit rating agency DBRS placed Enmax "under review with negative implications."

DBRS said the acquisition is consistent with Enmax's 2017 change in strategic direction to reduce its consolidated risk profile over time by focusing on regulated and contracted cash flows, including by growing its regulated and long-term contracted businesses.

However, Enmax will fund the purchase entirely with debt, which DBRS said represents a "significant increase in leverage for the company."

The deal is anticipated to close late in 2019.

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