8-KRegulation FDOther EventsExhibits & Filings

SEMPRA 8-K Report, Regulation FD Disclosure (Oct 18, 2018)

Filed October 18, 2018For Securities:SRESREA

Summary

Sempra Energy (SRE) filed an 8-K on October 18, 2018, to disclose significant transactions related to its indirect subsidiary, Oncor Electric Delivery Company LLC (Oncor). The key event is Oncor's agreement to acquire InfraREIT, Inc. for approximately $1.275 billion, plus transaction costs and assumption of debt. This acquisition is structured through a merger agreement and involves an asset exchange with Sharyland Utilities, LP (SU). Concurrently, Sempra Energy will acquire a 50% economic interest in Sharyland Holdings, LP (which will own SU after restructuring) for approximately $98 million. To fund these transactions, Sempra Energy and other Oncor equity holders are committed to capital contributions, with Sempra's share estimated at $1,025 million. Sempra intends to use proceeds from its previously announced sale of U.S. non-utility solar and wind assets to Consolidated Edison to help fund these contributions and its Sharyland acquisition. The transactions are subject to various regulatory approvals and are expected to close in mid-2019.

Key Highlights

  • 1Oncor to acquire InfraREIT, Inc. for approximately $1.275 billion, plus $40 million management agreement termination fee and transaction costs.
  • 2Sempra Energy to acquire a 50% economic interest in Sharyland Holdings, LP (which will own Sharyland Utilities) for approximately $98 million.
  • 3Sempra Energy's capital contribution to Oncor for these transactions is estimated at $1,025 million.
  • 4Proceeds from the planned sale of Sempra's U.S. non-utility solar and wind assets to Consolidated Edison are earmarked to fund part of Sempra's capital contributions and the Sharyland acquisition.
  • 5The transactions involve multiple agreements: an InfraREIT Merger Agreement, an Asset Exchange Agreement, and a Securities Purchase Agreement.
  • 6Closing of these transactions is contingent on various regulatory approvals, including from the PUCT, FERC, CFIUS, and HSR Act expiration, with an expected closing date in mid-2019.

Frequently Asked Questions

This 8-K filing announces significant transactions by Sempra Energy's indirect subsidiary, Oncor Electric Delivery Company LLC. It details Oncor's agreement to acquire InfraREIT, Inc., and Sempra Energy's acquisition of a 50% interest in Sharyland Holdings, LP, which will operate Sharyland Utilities. These transactions are intended to expand Oncor's utility operations.

Sempra Energy plans to use proceeds from its previously announced agreement to sell its U.S. non-utility solar and wind assets to Consolidated Edison, Inc. for $1.54 billion. These proceeds will help fund Sempra's capital contribution to Oncor and its direct acquisition of the interest in Sharyland Holdings, LP.

Oncor will acquire 100% of InfraREIT's shares and its subsidiary's partnership units for approximately $1.275 billion, plus a $40 million management agreement termination fee and other customary costs. This acquisition also includes InfraREIT's outstanding debt of approximately $945 million as of June 30, 2018.

The transactions require approval from multiple regulatory bodies, including the Public Utility Commission of Texas (PUCT), the Federal Energy Regulatory Commission (FERC), and the Committee on Foreign Investment in the United States (CFIUS). Additionally, the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 is necessary, along with other customary closing conditions and lender consents.