UNISOURCE ENERGY SHAREHOLDERS APPROVE PROPOSED
ACQUISITION
TUCSON, Ariz., March 29, 2004--The
shareholders of UniSource Energy Corp. (NYSE:
UNS) voted overwhelmingly today to approve the
company's proposed acquisition by Saguaro Utility
Group L.P. More than 72 percent of the 34,019,401
shares outstanding on the record date were voted,
with approximately 97 percent of the votes cast
in favor of the proposal.
"Today's vote underscores the fact that
the process established by our board of directors,
under the able leadership of board member John
Carter, produced a fair and valuable opportunity
for our shareholders," said James S. Pignatelli,
chairman, president and chief executive officer
of UniSource Energy.
"This transaction would give us the financial
resources to meet the growing demand in our
utility service territories while maintaining
the high levels of service and reliability our
customers have come to expect," Pignatelli
said.
An affiliate of Saguaro Utility Group, L.P.,
an Arizona limited partnership, has agreed to
purchase all of UniSource Energy's outstanding
shares for $25.25 per share. The price represents
a 30 percent premium over the closing price
on the last trading day before the agreement
was announced. UniSource Energy's board of directors
accepted the offer on Nov. 21, 2003.
The general partner of Saguaro Utility Group
L.P. is Sage Mountain, L.L.C., an Arizona company
whose managing member is Frederick B. Rentschler,
former president and chief executive officer
of Armour-Dial, Beatrice Cos. and Northwest
Airlines. Saguaro Utility's limited partners
include investment funds affiliated with Kohlberg
Kravis Roberts & Co., L.P., J.P. Morgan
Partners, LLC, and Wachovia Capital Partners.
The transaction would provide up to $263 million
to Tucson Electric Power Co. (TEP), UniSource
Energy's principal subsidiary, through the retirement
of a $95 million inter company loan from TEP
to UniSource Energy and a capital contribution
to TEP. TEP will use a significant portion of
these funds to retire some of its outstanding
debt.
UniSource Energy's senior management team is
expected to remain in place under the proposal,
and the company's headquarters would remain
in Tucson. No changes in UniSource Energy's
operations or personnel are expected to result
from this transaction.
The acquisition still requires approval by
the Arizona Corporation Commission (ACC), the
Securities and Exchange Commission (SEC) under
the Public Utility Holding Company Act and the
Federal Energy Regulatory Commission (FERC)
under the Federal Power Act, and the satisfaction
of other conditions set forth in the acquisition
agreement. The company expects the SEC and FERC
filings to be made in the next 30 days. Hearings
before the ACC are scheduled to begin on June
21, 2004. UniSource Energy expects to close
the transaction during the second half of 2004.
UniSource Energy's primary subsidiaries include
TEP, which provides electric service to more
than 367,000 customers in the Tucson area; UniSource
Energy Services, provider of natural gas and
electric service to more than 200,000 customers
in northern and southern Arizona; and Millennium
Energy Holdings, parent company of UniSource
Energy's unregulated energy businesses. For
more information about UniSource Energy and
its subsidiaries, visit www.UniSourceEnergy.com.
This news release contains forward-looking
information that involves risks and uncertainties,
that include, but are not limited to: the ability
to obtain necessary approvals and satisfy other
closing conditions contained in the acquisition
agreement; the outcome of regulatory proceedings;
the ongoing restructuring of the electric industry;
regional economic and market conditions which
could affect customer growth and the cost of
power supplies; the cost of debt and equity
capital; changes in accounting standards; weather
variations affecting customer usage; and other
factors listed in UniSource Energy's Form 10-K
and 10-Q filings with the Securities and Exchange
Commission. The preceding factors may cause
future results to differ materially from outcomes
currently expected by UniSource Energy.
Contacts:
UniSource Energy Corp., Tucson
Art McDonald, 520-884-3628 (Media)
Jo Smith, 520-884-3650 (Financial Analyst)
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