8-KMaterial AgreementsFinancial Events

SOUTHERN CO 8-K Report, Material Agreement (May 21, 2018)

Filed May 21, 2018For Securities:SOSOJESOJFSOJCSOJDSOMN

Summary

Southern Company announced significant divestitures on May 21, 2018, via an 8-K filing, detailing the sale of several Florida-based utility assets to NextEra Energy, Inc. The company is selling Gulf Power Company for an aggregate cash purchase price of $5.75 billion (subject to adjustments) and Florida City Gas (through its subsidiary NUI Corporation) for $530 million. Additionally, Southern Power is selling two Florida generating plants for $195 million (with potential daily adjustments). These transactions are expected to be completed in phases through the first half of 2019, with Florida City Gas anticipated to close in Q3 2018. In conjunction with the sale of its Florida plants, Southern Company is recording a pre-tax impairment charge of approximately $120 million ($90 million after tax) in the second quarter of 2018. These divestitures represent a strategic move to streamline operations and focus on core businesses, signaling a potential shift in Southern Company's asset portfolio. Investors should monitor the progress of regulatory approvals and the closing of these transactions, as well as the financial impact of the impairment charge.

Key Highlights

  • 1Southern Company to sell Gulf Power Company to NextEra Energy for $5.75 billion (net of assumed debt, subject to adjustments).
  • 2Sale of Florida City Gas business (via NUI Corp.) to NextEra Energy for $530 million (subject to adjustments).
  • 3Southern Power selling two Florida generating plants for $195 million, with potential daily price adjustments.
  • 4Divestitures are subject to customary closing conditions, including HSR Act clearance and various regulatory approvals (FERC, FCC).
  • 5Gulf Power sale expected to close in the first half of 2019; Florida City Gas sale expected in Q3 2018.
  • 6Southern Company to record a pre-tax impairment charge of approximately $120 million related to the sale of Florida generating plants.
  • 7Termination fees ranging from $6 million to $200 million are outlined in the respective sale agreements under specific circumstances.

Frequently Asked Questions

Southern Company is selling Gulf Power Company, its Florida City Gas business (which is part of Southern Company Gas), and two of its Southern Power generating plants located in Florida.

The aggregate purchase prices are $5.75 billion for Gulf Power (net of assumed debt and subject to adjustments), $530 million for Florida City Gas, and $195 million for the Florida generating plants. The net proceeds will be subject to customary adjustments for debt and working capital.

Yes, Southern Company is recording a pre-tax impairment charge of approximately $120 million ($90 million after tax) in the second quarter of 2018, specifically related to the assets of the Florida generating plants being sold.

The sale of Gulf Power and the Florida generating plants is expected to be completed in the first half of 2019. The sale of Florida City Gas is anticipated to be completed in the third quarter of 2018.