Scana To Sell Two Wholesale Businesses For $650 Mln

(RTTNews) - Energy-based holding company Scana Corp. (SCG) said Tuesday that it has agreed to sell two subsidiaries, Carolina Gas Transmission Corporation and Scana Communications Inc., in transactions valued at about $650 million in total. The transactions are part of the company's efforts to focus on its core retail business.

Scana will sell Carolina Gas Transmission to utility company Dominion Resources, Inc. (D) and sell Scana Communications to Spirit Communications. Both of these transactions, subject to customary closing conditions, are expected to close in the first quarter of 2015.

Spirit Communications is privately held by a group of independent telephone companies in South Carolina.

Kevin Marsh, Scana's Chief Executive Officer said, "In recent years, we have focused our efforts on the delivery of energy-related products and services through the core retail businesses of our company. While CGT and SCI have been very successful members of the SCANA portfolio, they are principally wholesale operations and comprise approximately 2% of our total assets."

Carolina Gas Transmission or CTG is Scana's FERC-regulated open access, transportation-only interstate pipeline company that owns and operates about 1,500 miles of interstate natural gas pipeline, measuring up to 24 inches in diameter, in South Carolina and southeastern Georgia.

Scana Communications or SCI owns and operates a 1,125 mile fiber optic telecommunications network as well as Ethernet network. The company provides tower site construction, management and rental services in South Carolina, North Carolina and Tennessee.

Scana said it expects aggregate proceeds, net of income taxes, to be in excess of $400 million. The company noted that the transactions will be accretive to its earnings, once the net proceeds have been deployed to displace previously planned equity issuances.

Further, Scana said that as a result of these sales, the $325 million in equity issuances that were expected to occur during 2015 will be eliminated from the company's financing plan.

This includes $100 million from Scana's dividend reinvestment plan and its employee 401(k) plan. In addition, the company expects the equity financing previously planned for 2016 will be eliminated.

Following the closing of these transactions, Scana's dividend reinvestment program and its employee 401(k) plan will fulfill their requirements for Scana common stock with open market purchases.

The company said that as dictated by its future equity needs dictate, the dividend reinvestment program and 401(k) plan will return to their practice of purchasing original issuance Scana common shares.

In a separate statement, Dominion Resources said it has agreed to acquire Carolina Gas Transmission from Scana for about $492.9 million. The company plans to close on the acquisition in January 2015.

The transaction would include no assumption of debt and, upon closing, would be immediately accretive to Dominion's operating earnings per share.

As part of the acquisition agreement, Dominion will offer continued employment for CGT's about 120-person workforce. In addition, the company has committed to an extended period of rate stability for current CGT customers.

Subject to board approvals by Dominion and Dominion Midstream Partners, LP (DM), Dominion expects to contribute CGT into Dominion Midstream for a combination of debt and units by mid-year 2015.

Dominion expects that the contribution of CGT would be immediately accretive to Dominion Midstream's distributed cash flow per unit.

Dominion, through certain of its subsidiaries, currently owns an approximate 68.5 percent limited partner interest in Dominion Midstream, in addition to its general partner, and all associated incentive distribution rights. Dominion will update its strategic plan at its analyst meeting on February 9, 2015.

SCG is trading at $57.21, up $0.73 or 1.29 percent on a volume of 362,848 shares.

D is trading at $71.63, down $0.35 or 0.49 percent on a volume of 187,068 shares.