(Dominion Energy, 10.Jul.2023) — Dominion Energy (NYSE: D) concluded a robust and competitive sale process and executed a definitive agreement to sell its 50% noncontrolling limited partner interest in Cove Point LNG, LP, to Berkshire Hathaway Energy, which currently operates the facility and owns a 100% general partner and 25% limited partner interest.
Highlights:
- Consistent with the priorities & commitments of ongoing business review
- Sale expected to close by year-end 2023, subject to standard HSR clearance
- Highly credit accretive; 100% of after-tax proceeds are expected to be used to retire debt
The total transaction value of $3.5bn, inclusive of transaction proceeds ($3.3bn) and expected proceeds from the termination of related interest rate derivatives ($0.2bn), represents approximately 10.8x estimated 2025 EBITDA of $325mn for Dominion Energy’s 50% noncontrolling interest in Cove Point.
Total after-tax proceeds of approximately $3.3bn are expected to be used to repay debt including the existing $2.3bn term loan secured by its noncontrolling interest in Cove Point. The company estimates that the transaction will increase the company’s consolidated FFO to debt by approximately 0.7%.
Associated with repaying the term loan, the company will unwind its related in the money “floating-to-fixed” interest rate derivative which is expected to result in proceeds to the company of approximately $200mn.
Robert M. Blue, Dominion chair, president, and chief executive officer, said:
“Since 2002, Cove Point has been an excellent service provider to its international and domestic customers – linking global gas supplies with American customers, and American gas supplies with customers around the world.
“However, this investment is non-core to Dominion Energy as we focus on our state-regulated utility operations. The sale demonstrates our commitment to the company’s credit profile and represents an attractive exit from what has been an excellent investment for our shareholders. With this sale, we have recycled $8.9bn of cash flow, including dividends from Cove Point, since 2018 — well in excess of our total investment in the facility inclusive of the export project construction cost of approximately $4.1bn. Further, this sale gives us the opportunity to reduce variable rate debt consistent with our goal of strengthening our balance sheet.”
The sale is subject to customary closing conditions, including clearance under the Hart-Scott-Rodino Act and a filing with the U.S. Department of Energy.
Dominion continues to make progress on its business review that is still underway. Consistent with the previously announced timeline, the company plans to host an investor day in the third quarter, during which management will provide an updated strategic and financial outlook.
McGuireWoods LLP served as legal counsel to Dominion. Mizuho Securities and RBC Capital Markets acted as the company’s financial advisors for the transaction.
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