Dominion and CNG agree to sell Virginia Natural Gas

Aug 10, 1999 02:00 AM

Dominion Resources Inc. and Consolidated Natural Gas Company said they have agreed to sell CNG's VNG local gas distribution subsidiary under an agreement with the staff of the Virginia SCC. In exchange, the SCC staff supports the proposed merger of Dominion Resources and CNG.
Under terms of the agreement, Dominion Resources will have one year after the merger is completed to sell VNG to a third party. If the sale is not completed by then, VNG is to be spun off as an independent company with the common stock being distributed to Dominion Resources shareholders.
Both deadlines are subject to reasonable extensions, which may be granted by the SCC. The commission is not bound by the agreement but will consider it during its deliberations.
Thos. E. Capps, chairman, president and CEO of Dominion Resources, and George A. Davidson, Jr., chairman and CEO of CNG, said in a joint statement: "Today's stipulation with the SCC staff is yet another step forward in the merger process and builds on our earlier approvals from the Pennsylvania and West Virginia commissions. We anticipate having all approvals to complete the merger by year end.
"When the merger is completed, we can direct our full energies toward the creation of additional shareholder value at America's premier energy company."
Shareholders have already overwhelmingly approved the combination, and the Pennsylvania and West Virginia public utility commissions unanimously approved it. In addition to Virginia and North Carolina, approvals are also required from several federal agencies.
Capps and Davidson said the divestiture will not interfere with the plans to create one of the largest integrated energy companies in the United States. The combined company will have nearly 4 mm natural gas and electric utility customers in five states, about 20,000 MW of electric generating capacity, and more than 3 tcf equivalent of natural gas and oil reserves.

VNG, with about 223,000 customers in the Hampton Roads region of Virginia, is the only place where the Dominion Resources and CNG utility service areas overlap. In 1998 VNG had after-tax earnings of $ 12.5 mm, or about 1.5 % of income from combined continuing operations for Dominion Resources and CNG.
Capps and Davidson noted that Virginia Natural Gas customers will see no change in service during the interim period: "We are committed to ensuring that there is a smooth transition for VNG's customers and employees. VNG is a superior company operated by an exceptional group of people."

Source: Business Wire via Newspage
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