8-KFinancial EventsOther Events

SEMPRA 8-K Report, Material Impairment (Sep 20, 2010)

Filed September 20, 2010For Securities:SRESREA

Summary

Sempra Energy (SRE) announced on September 20, 2010, a significant divestiture strategy for its joint venture, RBS Sempra Commodities. The company has entered into an agreement to sell its U.S. retail commodity marketing business, Sempra Energy Solutions, to Noble Group Ltd. for $317 million in cash, with Noble Group also assuming $265 million in debt. This sale is part of a larger plan to exit all businesses within the RBS Sempra Commodities joint venture, which Sempra Energy expects will result in total cash proceeds and distributions of $1.8 billion to $1.9 billion. As a consequence of these sales and the anticipated inability to fully recover the goodwill associated with its investment, Sempra Energy anticipates recording an after-tax impairment charge between $50 million and $150 million in the third quarter of 2010. This charge will not involve any cash expenditures. The completion of the sale to Noble Group is subject to regulatory approvals and is expected to close in the fourth quarter of 2010. Investors should note that this strategic move signals a significant restructuring and a move away from commodity trading operations.

Key Highlights

  • 1Sempra Energy to sell its U.S. retail commodity marketing business, Sempra Energy Solutions, to Noble Group Ltd. for $317 million cash and assumption of $265 million debt.
  • 2This sale is part of a broader plan to divest all businesses of the RBS Sempra Commodities joint venture.
  • 3Previous divestitures in July 2010 generated approximately $1.6 billion from the sale of global metals, oil, and European gas/power businesses.
  • 4Sempra Energy expects total cash proceeds and distributions from all divestitures of RBS Sempra Commodities to range from $1.8 billion to $1.9 billion.
  • 5An after-tax impairment charge of $50 million to $150 million is expected in Q3 2010 due to the divestitures, with no cash expenditure involved.
  • 6The transaction with Noble Group requires regulatory approvals (FERC, HSR Act) and is targeted for closing in Q4 2010.
  • 7The company is in advanced negotiations for the sale of its remaining North American wholesale power and natural gas business.

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