Fearing a loss of tax revenue, more than115 school districts in northern Ohio Thursday asked the Public Utilities Commission of Ohio to rehear an order in which it issued a letter to the US Securities and Exchange Commission approving the proposed acquisition by NiSource Inc., Columbus, Ohio, of Columbia Energy Group, Herndon, Va.
NiSource shareholders approved the transaction Thursday, and Columbia shareholders will vote on the transaction at a special meeting Friday. The agreement is still subject to various government approvals.
The combined companies will create a super regional energy company , serving 4.1 million customers, including 3.2 million gas distribution customers in nine states, said NiSource Chairman Gary L. Neale. It will also have pipeline operations in 16 states and one of the nation's largest gas storage systems at 700 bcf/day of capacity.
Among the concerns expressed by the schools' representatives are the potential loss of tax revenue to the schools, the $8 billion of debt being assumed by NiSource, and the potential adverse financial effect of debt on Columbia Gas rate-payers. Columbia Gas of Ohio is the state's largest natural gas company and is the largest gas distribution utility in Columbia Energy's system, serving about 1.3 million customers in 53 Ohio counties.
In comments to shareholders, Neale said all necessary state filings have been made, as well as those required by the US Federal Energy Regulatory Commission and the SEC. A filing with the US Department of Justice under the Hart-Scott-Rodino Act is scheduled for next week.
"The right assets, including upstream access to gas supply and storage, will allow NiSource to provide new options to gas markets that are projected to grow some 60% to 35 tcf of gas demand by 2020," Neale said. Nearly half of that demand growth will be located in the energy corridor from the Gulf of Mexico to New England, and will be driven by new technologies we are pioneering, such as distributed generation," he added.
"Neale pointed out that the $6.1 billion deal, announced Feb. 28, will be financed with about $3.1 billion in debt, $1 billion in noncore asset sales from both organizations, and nearly $2 billion in common equity.
The combined company also expects to realize synergies ranging from $98 million in 200l to $185 million in 2005. About 65% of NiSource outstanding shares were voted in approval, representing about 80% of the shares voted.
