Dominion Energy sells off interest in Cove Point LNG
In a $3.5 billion agreement with Berkshire Hathaway Energy, Dominion Energy this week sold off its 50 percent noncontrolling limited partner interest in Cove Point LNG, LP, an offshore facility near Maryland.
As a result, Berkshire Hathaway will operate and own both a 100 percent general partner and 75 percent limited partner interest in the facility. The sale is expected to close by the end of the year, at which point Dominion Energy will use 100 percent of its after-tax proceeds – approximately $3.3 billion – to retire its debts. By repaying an existing $2.3 billion term loan, the company also expected to generate about $200 million in proceeds by releasing money linked to a floating-to-fixed interest rate derivative.
“Since 2002, Cove Point has been an excellent service provider to its international and domestic customers – linking global gas supplies with American customers, and American gas supplies with customers around the world,” Robert Blue, Dominion Energy chair, president and CEO, said. “However, this investment is non-core to Dominion Energy as we focus on our state-regulated utility operations. The sale demonstrates our commitment to the company’s credit profile and represents an attractive exit from what has been an excellent investment for our shareholders.”
The sale will be subject to customary closing conditions, including scrutiny of filings with the U.S. Department of Energy and clearance through the Hart-Scott-Rodino Act. The latter requires companies and individuals to report stock purchases over a certain threshold and hold up transactions to give federal agencies time to investigate the potential impact of an acquisition.
