f8k102607.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D. C. 20549
FORM
8-K
CURRENT
REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date
of
report (Date of earliest event reported): October 26, 2007
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Exact
name of registrant as specified
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I.R.S.
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in
its charter, state of incorporation,
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Employer
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Commission
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address
of principal executive offices,
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Identification
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File
Number
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Telephone
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Number
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1-16305
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PUGET
ENERGY, INC.
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91-1969407
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A
Washington Corporation
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10885
- N.E. 4th Street, Suite 1200
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Bellevue,
Washington 98004-5591
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(425)
454-6363
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1-4393
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PUGET
SOUND ENERGY, INC.
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91-0374630
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A
Washington Corporation
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10885
- N.E. 4th Street, Suite 1200
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Bellevue,
Washington 98004-5591
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(425)
454-6363
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___________
Check
the
appropriate box below if the Form 8−K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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Soliciting
material pursuant to Rule 14a−12 under the Exchange Act (17 CFR
240.14a−12)
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Pre−commencement
communications pursuant to Rule 14d−2(b) under the Exchange Act
(17 CFR 240.14d−2(b))
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Pre−commencement
communications pursuant to Rule 13e−4(c) under the Exchange Act
(17 CFR 240.13e−4(c))
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Item
7.01 Regulation FD Disclosure
On
October 26, 2007, the Company issued the following press release.
Puget
Energy Signs Merger Agreement with Consortium of North American
Infrastructure Investors
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Transaction
to Provide Puget Sound Energy with $5 Billion in Capital Over the
Next
Five Years to Support Supply and Delivery Infrastructure
Needs
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PSE
Customers to Benefit from Increased Reliability of Energy Supply
and
Ongoing Commitment to the Advancement of Environmentally Sustainable
Practices and Plans to Secure New Energy
Supplies
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Headquarters
to Remain in Bellevue, Wash.
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Steve
Reynolds to Remain CEO with Current Management Team and
Employees
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BELLEVUE,
Wash. Oct. 26, 2007– Puget Energy (NYSE: PSD), the parent company of
Puget Sound Energy (PSE), a regulated utility providing electric and natural
gas
service to the growing Puget Sound region of western Washington, today announced
that it has entered into a definitive merger agreement with a consortium of
long-term infrastructure investors. The consortium is led by Macquarie
Infrastructure Partners (MIP), the Canada Pension Plan Investment Board (CPPIB)
and British Columbia Investment Management Corporation (bcIMC), and also
includes Alberta Investment Management (AIM), Macquarie-FSS Infrastructure
Trust
(MFIT) and Macquarie Bank Limited (together “Consortium”).
Under
the
terms of the agreement, the Consortium will acquire all of the outstanding
shares of Puget Energy for $30.00 per share in cash, representing over a 25
percent premium based upon Puget Energy’s closing share price on Oct. 25, 2007,
the last trading day prior to announcement of the transaction.
The
transaction has been approved by the Board of Directors of Puget Energy and
Boards of the Consortium members. The transaction is expected to
close during the second half of 2008, subject to approval by Puget Energy’s
shareholders and certain regulatory approvals, including those from the
Washington Utilities and Transportation Commission (WUTC) and the Federal Energy
Regulatory Commission (FERC).
Following
the merger, PSE will:
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Benefit
from access to capital to secure future energy supply and delivery
infrastructure to meet the needs of the growing western Washington
region
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Remain
headquartered in Bellevue with the current management team and
employees
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Continue
to provide customers with a high level of safe and reliable natural
gas
and electric service
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Preserve
its proud heritage and role in the
community
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Have
access to reliable resources to rapidly pursue cost-effective energy
efficiency and low-cost procurement of more environmentally sustainable
energy resources
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Benefit
from the partnership approach and utility investment experience of
the
Consortium
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“Like
many other utilities, Puget Sound Energy faces significant future capital
requirements to meet the growing energy needs of our customers, while continuing
to provide safe and reliable service to this dynamic region,” said Stephen P.
Reynolds, chairman, president and chief executive officer of Puget Energy and
PSE. “The merger will provide us with $5 billion over the next five
years, insulating us from volatility in the public equity markets. Partnering
with the Consortium, which is comprised of committed and experienced long-term
infrastructure investors, will provide the best end result for our customers,
our employees and the communities we serve in western
Washington. This will be business as usual, only better.
“Our
new
investors share our vision of a greener future and will help us make it a
reality. The merger will enable us to maintain our position as an environmental
steward and a long-time employer and corporate citizen in Washington,” Reynolds
added. “This partnership also ensures that our customers continue to receive
exceptional service from the same team of high-quality local PSE employees
they
have come to know and trust.”
Christopher
J. Leslie, chief executive officer of Macquarie Infrastructure Partners, said,
“Our Consortium has significant experience in managing energy and utility
investments in the United States and around the world. Macquarie,
CPPIB, bcIMC and our other investment partners have a proven record of
partnering with existing management to support the overall performance,
stewardship and growth of the businesses in which we invest.
“PSE
is
Washington’s oldest and largest energy utility; it is a strong, stable company
with a growing customer base in a market that has displayed consistent demand
over time,” Leslie continued. “Those characteristics, along with the strong
existing PSE management team, are appealing to the Consortium’s investors, most
of whom are U.S. and Canadian pension funds and institutions. We are firmly
committed to providing PSE with the capital necessary to maintain and improve
its existing delivery infrastructure and to further explore and develop more
energy efficient programs and new sources of renewable power.”
Access
to Capital
Recognizing
the needs of PSE’s service area, where the population is expected to grow by 28
percent – or about 1 million people – over the next 20 years, the Consortium
supports PSE’s plans to spend nearly $5 billion over the next five years to meet
the anticipated energy supply needs and delivery infrastructure requirements
of
the utility.
Customer
growth and the expiration of large purchased-power contracts in coming years
are
driving PSE’s need to acquire a large amount of new power
supplies. PSE estimates it will need more than 1,300
average-megawatts (aMWs) of new electricity supply by winter
2014-15. This need is expected to increase to more than 2,600 aMW by
2025 – roughly equivalent to the power demand of two cities the current size of
Seattle.
By
taking
publicly traded Puget Energy private, the Consortium will support PSE in meeting
these energy supply needs and other requirements through significant capital
expenditures.
In
connection with the transaction, the Consortium has committed to:
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An
initial investment of approximately $300 million in 12.5 million
shares of
newly issued Puget Energy common stock by way of a separate private
placement priced at $23.67 per share to fund the company’s ongoing
construction program and working capital needs. It is
anticipated this private placement will occur prior to the end of
2007.
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Securing
credit facilities of at least $2.15 billion to help fund PSE’s capital
expenditure program and working capital needs and support energy
hedging
activities upon closing of the
transaction.
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Committed
to PSE’s Headquarters, Management and Employees
Upon
completion of the merger, Puget Energy common stock will cease to be publicly
traded. The Company will be owned by the Consortium and continue to operate
as
Puget Energy Inc. Puget Energy’s and PSE’s headquarters will remain
in Bellevue under the continued leadership of Reynolds, and the utility will
continue to be subject to regulation, including that of the WUTC and the
FERC.
Under
the
terms of the merger, PSE’s current employees and management team will
remain. The Consortium will honor the current collective bargaining
agreements in place for PSE’s represented employees with the International
Brotherhood of Electric Workers, Local 77, and United Association of Journeymen
and Apprentices of the Plumbing and Pipefitting Industry of the United States
and Canada, Local 26 and Local 32, as well as existing wage and primary benefits
for all employees.
Greater
Benefits for Customers
The
Consortium and PSE are dedicated to continually improving the quality of service
to PSE’s residential and business customers. Following the merger,
customers can expect that the high level of service and dependability for which
PSE is known will continue.
“The
merger will help free PSE from its dependence on the short-term energy market
by
enabling PSE to finance more of its own energy resources,” said Reynolds.
“Customers will benefit from a more secure energy future that in turn permits
a
more integrated and state-of-the-art utility system.”
Dedicated
to Preserving PSE’s Heritage and Role in the Community
The
Consortium is dedicated to continuing the work of the Puget Sound Energy
Foundation and upon close of the transaction will make a contribution of $5
million to expand its charitable programs and contributions.
“A
key
priority of our Consortium is to ensure the preservation of PSE’s century-old
reputation both as an active community leader in the region and as Washington
state’s oldest and largest utility,” said Leslie.
Focused
on Advancing PSE’s Environmental Policies and Renewable Energy
Practices
The
Consortium is committed to PSE’s efforts to deliver sustainable, clean energy,
promote energy efficiency, reduce customer demand and peak consumption,
implement industry-leading environmental technologies and be at the forefront
of
renewable-energy development.
“We
are
committed to supporting PSE’s strong leadership on environmental issues and to
help the company meet the goals it has established to increase the generation
of
renewable sources of energy, improve energy efficiency, and invest in secure
and
reliable energy infrastructure,” added Leslie.
Specifically,
the Consortium:
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Supports
PSE’s commitment to meet the growing energy needs of customers while
increasing investment in energy efficiency and renewable resources
as part
of its environmental commitment to the
region
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Commits
to work with PSE to acquire all the renewable energy requirements
required
by law
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Endorses
and supports PSE’s Greenhouse Gas
Policy
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Will
continue to emphasize cost effectively meeting energy growth while
simultaneously minimizing the impacts on the
climate
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About
the Transaction
Under
the
terms of the definitive merger agreement, the Consortium will acquire all of
the
outstanding common shares of Puget Energy for $30.00 per share in
cash. The Consortium will also assume approximately $3.2 billion of
Puget Energy redeemable securities and outstanding debt obligations (estimated
at completion). The transaction has an enterprise value of approximately $7.4
billion.
The
offer
represents a premium of over 25 percent based upon Puget Energy’s closing share
price on Oct. 25, 2007 (the last trading day prior to the announcement of the
transaction) and a premium of over 25 percent over Puget Energy’s average 90-day
closing price ending Oct. 25, 2007.
In
addition, members of the Consortium will also invest approximately $300 million
in 12.5 million shares of newly issued common stock of Puget Energy under a
separate private placement, priced at $23.67 per share. These
proceeds will be invested in PSE to strengthen its equity base and be used
to
fund the company’s ongoing construction program and working capital
needs.
At
completion, the transaction will be funded as follows:
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$3.2
billion in shareholder capital provided by the
Consortium
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$1.6
billion of newly issued debt
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$2.6
billion of existing debt
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As
previously announced, Puget Energy will pay its regular quarterly dividend
on
Nov. 15, 2007. Consistent with past practices, the Company intends to continue
a
quarterly cash dividend on common stock of $0.25 per share ($1.00 per share
per
annum) pending approval of the merger and a prorated dividend for any partial
period immediately prior to the closing date of the transaction. Any
dividend must be approved by Puget Energy’s Board of Directors.
Under
the
merger agreement, to ensure that the company exercises its full fiduciary
responsibility to shareholders, Puget Energy may solicit
superior proposals from third parties through Dec. 10, 2007. The
Board of Directors of Puget Energy, with the assistance of its financial
advisor, intends to solicit superior proposals during this
period. There can be no assurances that the solicitation of superior
proposals will result in an alternative transaction. If Puget Energy
accepts a superior proposal, a break up fee and other expenses will be payable
to the Consortium. Puget Energy does not intend to disclose
developments with respect to this solicitation process during the “go shop”
unless its Board of Directors has made a decision regarding any superior
proposal.
Morgan
Stanley & Co. Inc. provided a fairness opinion regarding the transaction to
Puget Energy’s Board of Directors. Dewey & LeBoeuf LLP and
Perkins Coie LLP acted as legal advisors to Puget Energy in connection with
the
transaction.
Macquarie
Securities (USA) Inc. acted as financial advisor and Latham & Watkins LLP
acted as legal advisor to the Consortium in connection with the
transaction. Barclays Capital and Dresdner Kleinwort provided the
debt financing in support of the transaction.
Approvals
and Timing
The
merger transaction is subject to customary closing conditions, including the
approval of Puget Energy’s shareholders, the WUTC and FERC. Completion of the
transaction is expected during the second half of 2008.
Investor
Conference Call
Puget
Energy will host an investor call today, Friday, Oct. 26, at 7:30 a.m. PT /
10:30 a.m. ET, to discuss the announcement with investors, analysts and other
interested parties. Listeners may access a live broadcast of the
conference call on the company's website at www.PugetEnergy.com or by
dialing (877) 407-0782 in the United States or (201) 689-8567 outside the United
States. Please ask to be connected to the Puget Energy conference
call.
A
replay
of the conference call will be available from Oct. 26, 2007 through Nov. 9,
2007. You may access the webcast replay at www.PugetEnergy.com. A replay
of the conference call can be accessed by dialing (877) 660-6853 in the United
States or (201) 612-7415 outside the United States. After the prompt, please
enter account # 286 and ID # 260002.
Media
Kit
A
media
kit containing additional information regarding the transaction can be found
in
the bottom left column on the home page at www.PugetEnergy.com and in the
New & Notable section in the upper right corner of the homepage at
www.PSE.com.
About
Puget Energy
Puget
Energy (NYSE:PSD) is the parent company of Puget Sound Energy (PSE), a regulated
utility, providing electric and natural gas service primarily to the growing
Puget Sound region of Western Washington. For more information, visit
www.PugetEnergy.com
About
Puget Sound Energy
Washington
state’s oldest and largest energy utility, with a 6,000-square-mile service
territory stretching across 11 counties, Puget Sound Energy (PSE) serves more
than 1 million electric customers and 721,000 natural gas customers. PSE, a
subsidiary of Puget Energy (NYSE: PSD), meets the energy needs of its growing
customer base primarily in Western Washington through incremental,
cost-effective energy conservation, low-cost procurement of sustainable energy
resources, and far-sighted investment in the energy-delivery infrastructure.
PSE
employees are dedicated to providing great customer service to deliver energy
that is safe, reliable, reasonably priced, and environmentally responsible.
For
more information, visit www.PSE.com
About
the Consortium
Macquarie
Infrastructure Partners
Macquarie
Infrastructure Partners (MIP), headquartered in New York, is a diversified
unlisted fund focusing on infrastructure investments in the United States and
Canada. The majority of MIP investors are US and Canadian
institutions such as public pension funds, corporate pension funds, endowments
and foundations and Taft-Hartley (Union) funds. MIP has ten
investments which include a stake in Aquarion Company, a regulated New England
water utility, a stake in Duquesne Light, a regulated electric utility in
Pittsburgh, a stake in a US wireless tower operator, two Canadian port terminals
and interests in four toll roads in the United States and one in
Canada.
Macquarie
Group
The
Macquarie Group is a diversified international provider of specialist
investment, advisory, trading and financial services in select markets around
the world with over US$200 billion of total assets under management (as of
September 30, 2007). The Macquarie Group comprises Macquarie Bank (MBL), the
leading Australian investment bank, and its worldwide affiliated
entities.
MIP
and
MFIT are managed by members of the Macquarie Group, a leading global investor
and manager of infrastructure businesses. Members of the Macquarie Group manage
more than US$50 billion in equity invested in infrastructure and essential
service assets around the world through a range of listed and unlisted vehicles.
Infrastructure investments managed by Macquarie include investments in the
energy, utility, water, telecommunications and transportation sectors around
the
world. Macquarie aims to manage investments in infrastructure assets profitably
and responsibly.
CPP
Investment Board
The
CPP
Investment Board (CPPIB) invests the funds not needed by the Canada Pension
Plan
to pay current benefits on behalf of 16 million Canadian contributors and
beneficiaries. In order to build a diversified portfolio of CPP assets, the
CPP
Investment Board is investing in publicly-traded stocks, private equities,
real
estate, inflation-linked bonds, infrastructure and fixed income. Based in
Toronto, the CPP Investment Board is governed and managed independently of
the
Canada Pension Plan and at arm's length from governments. At June 30, 2007,
the
CPP Fund totaled C$120.5 billion including $2.2 billion in infrastructure
investments. For more information, please visit www.cppib.ca.
bcIMC
British
Columbia Investment Management Corporation (bcIMC) is an investment management
corporation based in Victoria, B.C. With over $83 billion in assets under
administration with global exposure, and supported by industry-leading
investment expertise, bcIMC offers fund management services for all major asset
classes, including currency and infrastructure investment.
bcIMC’s
Strategic Investment and Infrastructure Program seeks to acquire long term
interests in tangible infrastructure assets which hold the potential to generate
strong returns and cash yields to our clients. The focus of the program is
global with holdings in North America, Latin America, and Europe – including
direct investments in Corix, Thames Water, Aquarion and Transelec S.A. in Chile.
As of March 31, 2007, the Program was valued at over $2.3 billion.
bcIMC's
clients include public sector pension plans, provincial government, public
trusts, and insurance funds. For more information, visit
www.bcimc.com.
AIM
Alberta
Investment Management (AIM), based in Edmonton, Alberta, is one of the largest
public sector asset managers in Canada, with US$75 billion in assets under
management as of September 30, 2007. AIM manages capital for public sector
pension plan and government endowment fund clients across a wide variety of
asset classes. Alternative investments include private equity, real estate,
timberland, and infrastructure. AIM has made infrastructure investments and
investment commitments of about US$1.5 billion and has significant investment
experience in the regulated energy and utility sectors. Infrastructure
investments are made on a long-term basis, and the portfolio is diversified
across sector and geography, including investments in North America, Europe,
Asia, and Australia. For more information on AIM and its investments, please
visit www.finance.alberta.ca/business/investments.
MFIT
Macquarie-FSS
Infrastructure Trust ("MFIT") is an unlisted Australian infrastructure trust
managed by Macquarie Specialised Asset Management Limited ("Manager"). The
investment objective of MFIT is to make investments in a diversified range
of
infrastructure assets and related assets. MFIT currently holds
interests in four assets across four sectors including communications
infrastructure, vehicle inspection, electricity, and water infrastructure in
three countries: the USA, Spain, and the UK.
Forward
Looking Statements
Certain
statements in this press release regarding the proposed transaction between
Puget Energy and the Macquarie Consortium constitute “forward-looking
statements” under the federal securities laws. These forward looking statements
are subject to a number of substantial risks and uncertainties and may be
identified by the words “will,” “anticipate,” “believe,” “expect,” “may” or
“intend” or similar expressions. Actual results could differ materially from
these forward-looking statements. Factors that might cause or contribute to
such
material differences include, but are not limited to, the ability of Puget
Energy to obtain required regulatory and shareholder approvals of the merger,
the possibility that the merger will not close or that the closing will be
delayed, and other events and factors disclosed previously and from time to
time
in Puget Energy’s filings with the SEC, including Puget Energy’s Annual Report
on Form 10-K for the year ended December 31, 2006. Puget Energy disclaims any
obligation to update any forward-looking statements after the date of this
Current Report.
You
should not place undue reliance on any forward-looking statements contained
herein. Except as expressly required by the federal securities laws, Puget
Energy undertakes no obligation to update such factors or to publicly announce
the results of any of the forward-looking statements contained herein to reflect
future events, developments, changed circumstances or for any other
reason.
Additional
Information and Where to Find It
In
connection with the proposed transaction, Puget Energy will file a proxy
statement with the Securities and Exchange Commission (SEC). Before making
any
voting or investment decision, investors and security holders of Puget Energy
are urged to carefully read the entire proxy statement and any other relevant
documents filed with the SEC, as well as any amendments or supplements to those
documents, because they will contain important information about the proposed
transaction. A definitive proxy statement will be sent to the shareholders
of
Puget Energy in connection with the proposed transaction. Investors and security
holders may obtain a free copy of the proxy statement (when available) and
other
documents filed by Puget Energy at the SEC’s website at http://www.sec.gov. The
proxy statement and such other documents may also be obtained at no cost from
Puget Energy by directing the request to Puget Energy, 10885 NE 4th Street,
PSE-08, Bellevue, WA 98004, Attention: Sue Gladfelter.
Participants
in Solicitation
Puget
Energy, its directors, executive officers and other members of its management,
employees, and certain other persons may be deemed to be participants in the
solicitation of proxies from Puget Energy shareholders in connection with the
proposed transaction. Information about the interests of Puget Energy‘s
participants in the solicitation is set forth in Puget Energy’s proxy statements
and Annual Reports on Form 10-K, previously filed with the SEC, and in the
proxy
statement relating to the transaction when it becomes available.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrants have duly caused this report to be signed on their behalf by the
undersigned hereunto duly authorized.
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PUGET
ENERGY, INC.
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PUGET
SOUND ENERGY, INC.
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By:
/s/ Jennifer L. O’Connor
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Dated:
October 26, 2007
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Jennifer
L. O’Connor
Senior
Vice President, General Counsel, Chief Ethics and Compliance Officer,
and
Corporate Secretary
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