April 16, 1999
The international subsidiaries of San Diego-based Sempra Energy (NYSE: SRE), and New Jersey-based Public Service Enterprise Group (NYSE : PEG) announced that the board of directors of Chilquinta S.A., based in Santiago, Chile, approved their offer to acquire, under a 50-50 partnership, the shares of its subsidiary, Chilquinta Energia S.A., in a transaction valued at approximately $830 million. The transaction is conditioned on the buyers' review and approval of the schedules for the definitive stock purchase agreement.
Under the terms of the agreement, Sempra Energy International and PSEG Global will acquire 90 percent of the shares of Chilquinta Energia from its parent, Chilquinta. Upon final acquisition of the shares held by Chilquinta, the two purchasers will make a tender offer to acquire the remaining 10 percent of Chilquinta Energia shares from other shareholders. The acquisition will be funded by approximately $510 million in equity provided equally by the two partners and $320 million in non-recourse debt provided by a syndicate of banks at the time of closing. Chase Manhattan Securities is the advisor and provider of acquisition financing for PSEG Global. Dresdner Kleinwort Benson is the advisor and provider of acquisition financing for Sempra Energy International.
Both Sempra Energy International and PSEG Global expect the purchase of Chilquinta Energia to be accretive of the earnings of each company in 1999.
Chilquinta Energia is one of the leading energy companies in Latin America, with operations in Chile, Argentina and Peru. Chilquinta Energia is the third-largest electricity distributor in Chile, serving 405,000 customers in central Chile, north and west of the capital, Santiago.
"This strategic acquisition gives Sempra Energy International a solid platform for growth in the rapidly expanding Latin American energy market, more than doubling our investment in the region and adding substantial electric utility assets to our already sizeable portfolio of gas distribution properties," said Stephen L. Baum, vice chairman, president and chief operating officer of Sempra Energy and acting president of Sempra Energy International. "The acquisition also effectively doubles the number of customers served by Sempra Energy International and its partners in Latin America, allowing us to provide energy services to 2.5 million homes and business in Chile, Argentina, Peru, Uruguay and Mexico.
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