Summary
CMS Energy Corporation (CMS) has announced a significant divestiture, entering into a definitive agreement to sell all of its Panhandle Companies, including Panhandle Eastern Pipe Line Company and its subsidiaries, to Southern Union Panhandle Corp. and its sponsors for $662 million in cash. This strategic move aims to accelerate debt reduction, a key priority for the company. The sale is expected to result in a significant goodwill impairment charge for 2002, with any difference between the assets' book value and the sale price, beyond goodwill impairment, to be recognized in discontinued operations. CMS Energy will retain its interests in the Centennial and Guardian pipelines, though it is exploring the sale of these as well. The transaction is subject to customary closing conditions, including regulatory approvals and the filing of restated financial statements for Panhandle. The deal is expected to close by June 30, 2003, with provisions for potential extensions and a daily delay penalty if closing is not achieved by certain dates. Financial advisors have provided fairness opinions on the consideration to be received by CMS Energy.
Key Highlights
- 1CMS Energy to sell Panhandle Companies for $662 million cash.
- 2Sale proceeds earmarked for accelerating debt reduction.
- 3Significant goodwill impairment expected in 2002 related to the sale.
- 4CMS Energy will retain interests in Centennial and Guardian pipelines, with potential for further divestiture.
- 5Transaction subject to regulatory approvals and other closing conditions.
- 6Deal expected to close by June 30, 2003, with potential delay penalties.
- 7Fairness opinions received from Merrill Lynch and Salomon Smith Barney.