Summary
Sempra Energy (SRE) announced on December 27, 2006, its decision to sell its non-controlling interests in two Argentine natural gas distribution companies due to ongoing disputes with the Argentine government. This divestiture, effective December 20, 2006, is not expected to materially impact Sempra's balance sheet or net equity. The company had previously reduced the value of these investments through charges against Accumulated Other Comprehensive Income stemming from Argentine peso devaluations. Despite the limited balance sheet impact, Sempra will record a non-cash impairment charge of approximately $200 million in the fourth quarter of 2006. This charge reflects the reversal of previously recognized charges from Accumulated Other Comprehensive Income and an adjustment to the remaining investment value. Investors should note that this is a non-cash charge and is primarily an accounting adjustment to reflect the sale.
Key Highlights
- 1Sempra Energy will sell its investments in two Argentine natural gas distribution companies.
- 2The decision to sell is driven by continuing disputes with the Argentine government.
- 3The sale involves non-controlling interests, accounted for using the equity method.
- 4The divestiture is not expected to have a material effect on Sempra's balance sheet or net equity.
- 5Investments were previously impaired due to Argentine peso devaluations and reduced through Accumulated Other Comprehensive Income.
- 6A non-cash impairment charge of approximately $200 million will be recorded in Q4 2006.
- 7The impairment charge includes reversal of prior charges from Accumulated Other Comprehensive Income and an adjustment to investment value.