UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) February 7, 2007
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BLACK HILLS CORPORATION
(Exact name of registrant as specified in its charter)
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South Dakota | ||||
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(State or other jurisdiction of incorporation)
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001-31303 |
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46-0458824 | ||
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(Commission File Number) |
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(IRS Employer Identification No.) | ||
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625 Ninth Street, PO Box 1400 Rapid City, South Dakota (Address of principal executive offices)
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57709-1400 (Zip Code) | ||
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605.721.1700 | ||||
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(Registrant’s telephone number, including area code) | ||||
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Not Applicable | ||||
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(Former name or former address, if changed since last report) | ||||
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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 (see General Instruction A.2. below):
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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 8.01 |
Other Events |
On February 7, 2007, we issued a joint press release with Aquila, Inc. and Great Plains Energy Incorporated, announcing that we had entered into agreements to purchase Aquila's Colorado electric utility assets and its Colorado, Iowa, Kansas and Nebraska gas utility assets, for an aggregate purchase price of $940 million, subject to adjustment. At the same time, Aquila entered into an agreement with Great Plains to merge Aquila with a subsidiary of Great Plains. Each transaction is contingent on, among other things, approval of various utility regulatory agencies, and the completion of the other transaction, meaning that one transaction will not be completed unless the other transaction is completed.
Copies of our press releases and investor relations presentations regarding the transaction are attached as exhibits to this Form 8-K. This information is being furnished pursuant to Regulation FD and shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
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Item 9.01 |
Financial Statements and Exhibits |
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(d) |
Exhibits |
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99.1 |
Regional Press Release distributed in South Dakota and Wyoming dated February 7, 2007 issued by Black Hills Corporation. | ||||
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99.2 |
Regional Press Release distributed in Colorado dated February 7, 2007 issued by Black Hills Corporation. | ||||
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99.3 |
Regional Press Release distributed in Iowa dated February 7, 2007 issued by Black Hills Corporation. | ||||
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99.4 |
Regional Press Release distributed in Kansas dated February 7, 2007 issued by Black Hills Corporation. | ||||
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99.5 |
Regional Press Release distributed in Nebraska dated February 7, 2007 issued by Black Hills Corporation. | ||||
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99.6 |
Black Hills Corporation’s Investor Presentation on the proposed purchase of certain utility and related assets of Aquila, Inc. in Colorado, Kansas, Nebraska and Iowa. | ||||
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99.7 |
Black Hills Corporation’s Transaction Overview on the proposed purchase of certain utility and related assets of Aquila, Inc. in Colorado, Kansas, Nebraska and Iowa. | ||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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BLACK HILLS CORPORATION |
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By: /s/ Mark T. Thies |
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Mark T. Thies |
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Executive Vice President |
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and Chief Financial Officer |
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Date: February 7, 2007 |
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3
Exhibit Index
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Exhibit No. |
Title of Document |
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99.1 |
Regional Press Release distributed in South Dakota and Wyoming dated February 7, 2007 issued by Black Hills Corporation. |
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99.2 |
Regional Press Release distributed in Colorado dated February 7, 2007 issued by Black Hills Corporation. |
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99.3 |
Regional Press Release distributed in Iowa dated February 7, 2007 issued by Black Hills Corporation. |
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99.4 |
Regional Press Release distributed in Kansas dated February 7, 2007 issued by Black Hills Corporation. |
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99.5 |
Regional Press Release distributed in Nebraska dated February 7, 2007 issued by Black Hills Corporation. |
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99.6 |
Black Hills Corporation’s Investor Presentation on the proposed purchase of certain utility and related assets of Aquila, Inc. in Colorado, Kansas, Nebraska and Iowa. |
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99.7 |
Black Hills Corporation’s Transaction Overview on the proposed purchase of certain utility and related assets of Aquila, Inc. in Colorado, Kansas, Nebraska and Iowa. |
4
Black Hills Corporation to Acquire Aquila Utility Operations
in Colorado, Iowa, Kansas and Nebraska
RAPID CITY, SD—February 7, 2007—Black Hills Corporation (NYSE: BKH), a diversified energy company based in Rapid City, South Dakota, today announced that it has signed a definitive agreement to purchase from Kansas City, Missouri-based Aquila, Inc. (NYSE: ILA) its electric utility operations in Colorado and its gas utilities in Colorado, Iowa, Kansas and Nebraska. Black Hills will pay a total purchase price of $940 million in cash that will be financed through a combination of newly-issued Black Hills stock, debt and internally-generated cash.
“This announcement is an exciting step in Black Hills Corporation’s proud history,” said David Emery, Chairman, President and Chief Executive Officer of Black Hills Corporation. “Our roots in utility operations date back to 1883, when Black Hills Electric Light Company powered the inter-urban trolley between Deadwood and Lead to serve the gold mining industry. Adding utility customers in surrounding states is a natural extension of our core business, and will make us an even stronger company. Customers, communities, shareholders, and employees will benefit.”
“Opportunities like this do not happen in our region very often,” said Emery. “We are pleased that we could find such attractive properties having so much in common with our existing retail operations. These five utilities serve communities that we believe are a lot like our existing service areas for Black Hills Power and Cheyenne Light. We believe the employees of these operations also share our work ethic and our commitment to outstanding customer service and reliability. The properties are a great fit for Black Hills.”
“We look forward to welcoming all Aquila employees in all four states to the Black Hills team,” said Linn Evans, President and Chief Operating Officer of Black Hills Corporation’s Retail Businesses. “And we particularly look forward to delivering to our new customers in those states the benefits of the reliable, clean and value-priced energy we have long been providing to our customers in our current home region.”
Under the proposed transaction, the completion of which is subject to various federal and state regulatory approvals and certain other closing conditions, Black Hills will purchase Aquila’s electric utility operations in Colorado, which serve approximately 93,000 customers; its gas operations in Colorado, with 68,000 customers; its gas operations in Kansas, with 108,000 customers; its gas operations in Nebraska, with 198,000 customers; and its gas operations in Iowa, with 149,000 customers.
“Today’s announced expansion is another step toward a stronger, more secure future for our company,” said Evans. “We expect the transaction to benefit the Black Hills region and South Dakota as well. We’ll be adding new administrative jobs and, of course, our taxes and community investment will grow as the company grows. We like to consider ourselves good corporate citizens.”
As also announced separately this morning, Aquila, which is based in Kansas City, Mo., has signed a definitive agreement to be acquired by Great Plains Energy (NYSE: GXP), also of Kansas City, in a cash and stock transaction valued at $1.7 billion. Black Hills’ purchase of Aquila’s utility assets in Colorado, Kansas, Nebraska and Iowa is contingent upon the simultaneous consummation of the Great Plains/Aquila transaction.
–Page 1 of 2 –
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Black Hills Corporation to Acquire Aquila Utility Operations in Colorado, Iowa, Kansas and Nebraska |
February 7, 2007 |
About Black Hills Corporation
Black Hills Corporation is a diversified energy company. Our retail businesses are Black Hills Power, an electric utility serving western South Dakota, northeastern Wyoming and southeastern Montana; and Cheyenne Light, Fuel & Power, an electric and gas distribution utility serving the Cheyenne, Wyoming vicinity. Black Hills Energy, our wholesale energy business unit, generates electricity, produces natural gas, oil and coal, and markets energy. More information is available at www.blackhillscorp.com.
Advisory to Broadcast Media
A video clip of an interview with David R. Emery, Chairman, President and CEO of Black Hills Corporation, regarding this transaction is available at http://www.linnproductions.com/clients/media.
Information Concerning Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Company believes that its expectations as contained in this news release are based on reasonable assumptions. No assurance, however, can be given that such expectations will prove to have been correct or that the transactions described above will occur. A number of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this news release. See "Risk Factors" in the Company’s 2005 Annual Reports on Form 10-K and its other public filings, press releases and discussions with Company management. Black Hills Corporation undertakes no obligation to publicly update or revise any forward-looking statements.
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Contacts:
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Rapid City Barbara Zar (605) 390-2733 cell (605) 721-2366 office bzar@bh-corp.com |
Cheyenne Randy Winkelman (307) 630-3288 cell (307) 778-2109 office
Rick Kaysen (307) 630-6290 cell (307 778-2100 office |
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# # #
– Page 2 of 2 –
Black Hills Corporation to Acquire Aquila’s
Electric and Gas Utility Operations in Colorado
Colorado Customers Currently Served by Aquila Will Benefit from Black Hills’ Hundred-Year History of Reliable, High-Quality Customer Service
RAPID CITY, S. Dak. and GOLDEN, Colo., February 7, 2007 — Black Hills (NYSE: BKH), a diversified energy company based in Rapid City, South Dakota, today announced that it has signed a definitive agreement to purchase from Aquila (NYSE: ILA) its electric and gas utility operations in the State of Colorado, as well as certain other Aquila-owned utility assets in three other states.
“Black Hills is a diversified energy company with roots in utility operations dating back to the 1880s,” said David R. Emery, Chairman, President and Chief Executive Officer of Black Hills. “We look forward to adding Aquila’s utility operations in Colorado to our existing array of Colorado-based energy businesses. Our wholesale energy subsidiaries are headquartered in Golden, including oil and gas exploration and production, power generation and energy marketing. Our Golden offices oversee operations in Colorado and eleven other states. Adding Colorado to our retail utility presence is a logical extension of our existing operations in the State.
“As part of the same transaction, we also are acquiring utilities in Kansas, Nebraska and Iowa,” Mr. Emery noted. “We look forward to welcoming Aquila’s employees in all four states to the Black Hills team. And we particularly look forward to delivering to our new customers in those states the benefits of the reliable, clean and value-priced energy we have long been providing to our customers in our current home region.”
Under the proposed transaction, the completion of which is subject to various federal and state regulatory approvals, including that of the Colorado Public Utilities Commission, and certain other closing conditions, Black Hills will purchase Aquila’s electric utility operations in southeastern Colorado, which serve approximately 94,000 residential and commercial customers and generate annual energy sales of about 2.0 million MWH; and Aquila’s gas utility operations elsewhere in Colorado, which serve approximately 68,000 customers, providing them with approximately 7.1 BCF (billion cubic feet) of natural gas annually.
The communities served by these utilities include Burlington, Cañon City, Castle Rock, Fountain, Pueblo and Rocky Ford.
The purchase of Aquila’s Colorado operations, which Black Hills expects to take place in about a year, is part of a larger transaction in which Black Hills will also purchase Aquila’s gas utility and related operations in Kansas, Nebraska and Iowa, for a total cash purchase price of $940 million.
As also announced separately this morning, Aquila, which is based in Kansas City, Mo., has signed a definitive agreement to be acquired by Great Plains Energy (NYSE: GXP), also of Kansas City, in a cash and stock transaction valued at $1.7 billion. Black Hills’ purchase of Aquila’s utility assets in Colorado, Kansas, Nebraska and Iowa will be completed immediately prior to the consummation of the Great Plains Energy/Aquila transaction.
2
Black Hills currently provides electric utility services to a total of 101,500 customers in South Dakota, Wyoming, and Montana, and gas utility services to another 32,000 customers in Wyoming. Upon completion of the two transactions, Black Hills will have a total of more than 750,000 gas and electric customers in seven contiguous Midwestern and Rocky Mountain states.
Credit Suisse Securities (USA), LLC served as exclusive financial advisor to Black Hills in this transaction.
About Black Hills
Black Hills is a diversified energy company. Our retail businesses are Black Hills Power, an electric utility serving western South Dakota, northeastern Wyoming and southeastern Montana; and Cheyenne Light, Fuel & Power, an electric and gas distribution utility serving the Cheyenne, Wyoming vicinity. Black Hills Energy, the wholesale energy business unit, generates electricity, produces natural gas, oil and coal, and markets energy. More information is available at www.blackhillscorp.com.
Advisory to Broadcast Media: A video clip of an interview with David R. Emery, Chairman, President and CEO of Black Hills Corporation, regarding this transaction is available at http://www.linnproductions.com/clients/media.
Caution Concerning Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Black Hills believes that its expectations as contained in this news release are based on reasonable assumptions. No assurance, however, can be given that such expectations will prove to have been correct or that the transactions described above will occur. A number of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this news release. See "Risk Factors" in the Company’s 2005 Annual Reports on Form 10-K and its other public filings, press releases and discussions with Company management. Black Hills undertakes no obligation to publicly update or revise any forward-looking statements.
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Contacts: |
Kyle D. White |
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VP Corporate Affairs | |
Black Hills Corporation
605-721-2313
kwhite@bh-corp.com
or
Diana C. Postemsky
Kekst and Company
212-521-4805
diana-postemsky@kekst.com
Black Hills Corporation to Acquire
Aquila’s Gas Utility Operations in Iowa
Iowa Customers Currently Served by Aquila Will Benefit from Black Hills’
Hundred-Year History of Reliable, High-Quality Customer Service
RAPID CITY, S. Dak. and WEST DES MOINES, Iowa., Feb. 7, 2007 — Black Hills (NYSE: BKH), a diversified energy company based in Rapid City, South Dakota, today announced that it has signed a definitive agreement to purchase from Aquila, Inc. (NYSE: ILA) its gas utility operations in the State of Iowa, as well as certain other Aquila-owned utility assets in three other states.
“Black Hills is a diversified energy company with roots in utility operations dating back to the 1880s,” said David R. Emery, Chairman, President and Chief Executive Officer of Black Hills. “We look forward to extending our utility operations to Iowa, Kansas and Nebraska, where we currently have no presence, and expanding them in Colorado, where we currently have a substantial non-regulated energy presence. We look forward to welcoming Aquila’s employees in all four states to the Black Hills team. And we particularly look forward to delivering to our new customers in those states the benefits of the reliable, clean and value-priced energy we have long been providing to our customers in our current home region.”
Under the proposed transaction, the completion of which is subject to various federal and state regulatory approvals, including that of the Iowa Utilities Board, and certain other closing conditions, Black Hills will purchase Aquila’s gas utility operations in Iowa, which serve approximately 149,000 customers, providing them with about 27 BCF (billion cubic feet) of natural gas annually.
The communities served by these utilities include Council Bluffs, Denison, Dubuque, Forest City, Newton, Spencer, Webster City and West Des Moines.
The purchase of Aquila’s Iowa operations, which Black Hills expects to take place in about a year, is part of a larger transaction in which Black Hills will also purchase certain Aquila utility properties and related operations in Colorado, Kansas and Nebraska, for a total cash purchase price of $940 million.
As also announced separately this morning, Aquila, which is based in Kansas City, Mo., has signed a definitive agreement to be acquired by Great Plains Energy (NYSE: GXP), also of Kansas City, in a cash and stock transaction valued at $1.7 billion. Black Hills’ purchase of Aquila’s utility assets in Colorado, Kansas, Nebraska and Iowa will be completed immediately prior to completion of the Great Plains Energy/Aquila transaction.
Black Hills currently provides electric utility services to a total of 101,500 customers in South Dakota, Wyoming, and Montana, and gas utility services to another 32,000 customers in Wyoming. Upon completion of the two transactions, Black Hills will have a total of more than 750,000 gas and electric customers in seven contiguous Midwestern and Rocky Mountain states.
2
Credit Suisse Securities (USA), LLC served as exclusive financial advisor to Black Hills in this transaction.
About Black Hills
Black Hills is a diversified energy company. Our retail businesses are Black Hills Power, an electric utility serving western South Dakota, northeastern Wyoming and southeastern Montana; and Cheyenne Light, Fuel & Power, an electric and gas distribution utility serving the Cheyenne, Wyoming vicinity. Black Hills Energy, the wholesale energy business unit, generates electricity, produces natural gas, oil and coal, and markets energy. More information is available at www.blackhillscorp.com.
Advisory to Broadcast Media: A video clip of an interview with David R. Emery, Chairman, President and CEO of Black Hills Corporation, regarding this transaction is available at http://www.linnproductions.com/clients/media.
Caution Concerning Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Black Hills believes that its expectations as contained in this news release are based on reasonable assumptions. No assurance, however, can be given that such expectations will prove to have been correct or that the transactions described above will occur. A number of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this news release. See "Risk Factors" in the Company’s 2005 Annual Reports on Form 10-K and its other public filings, press releases and discussions with Company management. Black Hills undertakes no obligation to publicly update or revise any forward-looking statements.
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Contacts: |
Kyle D. White |
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VP Corporate Affairs | |
Black Hills Corporation
605-721-2313
kwhite@bh-corp.com
or
Diana C. Postemsky
Kekst and Company
212-521-4805
diana-postemsky@kekst.com
Black Hills Corporation to Acquire Aquila’s
Gas Utility Operations in Kansas
Kansas Customers Currently Served by Aquila Will Benefit from Black Hills’ Hundred-Year History of Reliable, High-Quality Customer Service
RAPID CITY, S. Dak. and WICHITA, Kan., February 7, 2007 — Black Hills (NYSE: BKH), a diversified energy company based in Rapid City, South Dakota, today announced that it has signed a definitive agreement to purchase from Aquila (NYSE: ILA) its gas utility operations in the State of Kansas, as well as certain other Aquila-owned utility assets in three other states.
“Black Hills is a diversified energy company with roots in utility operations dating back to the 1880s,” said David R. Emery, Chairman, President and Chief Executive Officer of Black Hills. “We look forward to extending our utility operations to Kansas, Iowa, and Nebraska, where we currently have no presence, and expanding them in Colorado, where we currently have a substantial non-regulated energy presence. We look forward to welcoming Aquila’s employees in all four states to the Black Hills team. And we particularly look forward to delivering to our new customers in those states the benefits of the reliable, clean and value-priced energy we have long been providing to our customers in our current home region.”
Under the proposed transaction, the completion of which is subject to various federal and state regulatory approvals, including that of the Kansas Corporate Commission, and certain other closing conditions, Black Hills will purchase Aquila’s gas utility operations in Kansas, which serve approximately 108,000 customers, providing them with about 23 BCF (billion cubic feet) of natural gas annually.
The communities served by these utilities include Dodge City, Garden City, Goodland, Lawrence, Liberal, and Wichita.
The purchase of Aquila’s Kansas operations, which Black Hills expects to take place in about a year, is part of a larger transaction in which Black Hills will also purchase certain Aquila utility properties and related operations in Colorado, Nebraska and Iowa, for a total cash purchase price of $940 million.
As also announced separately this morning, Aquila, which is based in Kansas City, Mo., has signed a definitive agreement to be acquired by Great Plains Energy (NYSE: GXP), also of Kansas City, in a cash and stock transaction valued at $1.7 billion. Black Hills’ purchase of Aquila’s utility assets in Colorado, Kansas, Nebraska and Iowa will be completed immediately prior to completion of the Great Plains Energy/Aquila transaction.
Black Hills currently provides electric utility services to a total of 101,500 customers in South Dakota, Wyoming, and Montana, and gas utility services to another 32,000 customers in Wyoming. Upon completion of the two transactions, Black Hills will have a total of more than 750,000 gas and electric customers in seven contiguous Midwestern and Rocky Mountain states.
2
Credit Suisse Securities (USA), LLC served as exclusive financial advisor to Black Hills in this transaction.
About Black Hills
Black Hills is a diversified energy company. Our retail businesses are Black Hills Power, an electric utility serving western South Dakota, northeastern Wyoming and southeastern Montana; and Cheyenne Light, Fuel & Power, an electric and gas distribution utility serving the Cheyenne, Wyoming vicinity. Black Hills Energy, the company’s wholesale energy business unit, generates electricity, produces natural gas, oil and coal, and markets energy. More information is available at www.blackhillscorp.com.
Advisory to Broadcast Media: A video clip of an interview with David R. Emery, Chairman, President and CEO of Black Hills Corporation, regarding this transaction is available at http://www.linnproductions.com/clients/media.
Caution Concerning Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Black Hills believes that its expectations as contained in this news release are based on reasonable assumptions. No assurance, however, can be given that such expectations will prove to have been correct or that the transactions described above will occur. A number of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this news release. See "Risk Factors" in the Company’s 2005 Annual Reports on Form 10-K and its other public filings, press releases and discussions with Company management. Black Hills undertakes no obligation to publicly update or revise any forward-looking statements.
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Contacts: |
Kyle D. White |
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VP Corporate Affairs | |
Black Hills Corporation
605-721-2313
kwhite@bh-corp.com
or
Diana C. Postemsky
Kekst and Company
212-521-4805
diana-postemsky@kekst.com
Black Hills Corporation to Acquire Aquila’s
Gas Utility Operations in Nebraska
Nebraska Customers Currently Served by Aquila Will Benefit from Black Hills’ Hundred-Year History of Reliable, High-Quality Customer Service
RAPID CITY, S. Dak. and LINCOLN, Neb, February 7, 2007 — Black Hills (NYSE: BKH), a diversified energy company based in Rapid City, South Dakota, today announced that it has signed a definitive agreement to purchase from Aquila (NYSE: ILA) its gas utility and related operations in the State of Nebraska, as well as certain other Aquila-owned utility assets in three other states.
“Black Hills is a diversified energy company with roots in utility operations dating back to the 1880s,” said David R. Emery, Chairman, President and Chief Executive Officer of Black Hills. “We look forward to extending our utility operations to Nebraska, Kansas, and Iowa, where we currently have no presence, and expanding them in Colorado, where we currently have a substantial non-regulated energy presence. We look forward to welcoming Aquila’s employees in all four states to the Black Hills team. And we particularly look forward to delivering to our new customers in those states the benefits of the reliable, clean and value-priced energy we have long been providing to our customers in our current home region.”
Under the proposed transaction, the completion of which is subject to various federal and state regulatory approvals, including that of the Nebraska Public Service Commission, and certain other closing conditions, Black Hills will purchase Aquila’s gas utility operations in Nebraska, which serve approximately 198,000 customers, providing them with about 18 BCF (billion cubic feet) of natural gas annually.
The communities served by these utilities include Beatrice, Bellevue, Blair, Columbus, Fairbury, Lincoln, Norfolk, Omaha, Wayne and York.
The purchase of Aquila’s Nebraska operations, which Black Hills expects to take place in about a year, is part of a larger transaction in which Black Hills will also purchase certain Aquila utility properties and related operations in Colorado, Kansas and Iowa, for a total cash purchase price of $940 million.
As also announced separately this morning, Aquila, which is based in Kansas City, Mo., has signed a definitive agreement to be acquired by Great Plains Energy (NYSE: GXP), also of Kansas City, in a cash and stock transaction valued at $1.7 billion. Black Hills’ purchase of Aquila’s utility assets in Colorado, Kansas, Nebraska and Iowa will be completed immediately prior to completion of the Great Plains Energy/Aquila transaction.
Black Hills currently provides electric utility services to a total of 101,500 customers in South Dakota, Wyoming, and Montana, and gas utility services to another 32,000 customers in Wyoming. Upon completion of the two transactions, Black Hills will have a total of more than 750,000 gas and electric customers in seven contiguous Midwestern and Rocky Mountain states.
2
Credit Suisse Securities (USA), LLC served as exclusive financial advisor to Black Hills in this transaction.
About Black Hills
Black Hills is a diversified energy company. Our retail businesses are Black Hills Power, an electric utility serving western South Dakota, northeastern Wyoming and southeastern Montana; and Cheyenne Light, Fuel & Power, an electric and gas distribution utility serving the Cheyenne, Wyoming vicinity. Black Hills Energy, the wholesale energy business unit, generates electricity, produces natural gas, oil and coal, and markets energy. More information is available at www.blackhillscorp.com.
Advisory to Broadcast Media: A video clip of an interview with David R. Emery, Chairman, President and CEO of Black Hills Corporation, regarding this transaction is available at http://www.linnproductions.com/clients/media.
Caution Concerning Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Black Hills believes that its expectations as contained in this news release are based on reasonable assumptions. No assurance, however, can be given that such expectations will prove to have been correct or that the transactions described above will occur. A number of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this news release. See "Risk Factors" in the Company’s 2005 Annual Reports on Form 10-K and its other public filings, press releases and discussions with Company management. Black Hills undertakes no obligation to publicly update or revise any forward-looking statements.
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Contacts: |
Kyle D. White |
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VP Corporate Affairs | |
Black Hills Corporation
605-721-2313
kwhite@bh-corp.com
or
Diana C. Postemsky
Kekst and Company
212-521-4805
diana-postemsky@kekst.com
Black Hills Corporation
AGREEMENT TO PURCHASE
Certain Utility and Related Assets of Aquila, Inc.
in Colorado, Kansas, Nebraska and Iowa
F E B R U A R Y 2 0 0 7
T R A N S A C T I O N O V E R V I E W
– 1 –
Information concerning forward-looking statements
Statements made in this document that are not based on historical facts are forward-looking, may involve risks and uncertainties, and are
intended to be as of the date when made. In connection
with the safe harbor provisions of the Private Securities Litigation Reform Act of
1995, Black Hills Corporation, Great Plains Energy and Aquila are providing a number of important factors, risks and uncertainties that could
cause actual results to
differ materially for the provided forward-looking information. These include: obtaining shareholder approvals required
for the transactions (Great Plains and Aquila); the timing of, and the conditions imposed by, regulatory approvals required for the
transactions;
satisfying the conditions to the closing of the transactions; Great Plains and Black Hills successfully integrating the acquired
Aquila businesses into their respective operations, avoiding problems which may result in either company not operating as effectively
and
efficiently as expected; the timing and amount of cost-cutting synergies; unexpected costs or unexpected liabilities, or the effects of purchase
accounting may be different from the companies’ expectations; the actual resulting credit ratings
of the companies or their respective
subsidiaries; the effects on the businesses of the companies resulting from uncertainty surrounding the transactions; the effect of future
regulatory or legislative actions on the companies; and other economic, business,
and/or competitive factors. Additional factors that may
affect the future results of Black Hills, Great Plains and Aquila are set forth in their most recent quarterly report on Form 10-Q or annual
report on Form 10-K with the Securities and Exchange
Commission (“SEC”), which are available at www.blackhillscorporation.com,
www.greatplainsenergy.com, and www.aquila.com respectively. Black Hills, Great Plains and Aquila undertake no obligation to publicly
update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
– 2 –
Definitive agreements:
– Black Hills Corporation to purchase certain
Aquila utility assets in
Colorado,
Kansas, Nebraska and Iowa for $940 million cash, subject to
working capital adjustments at completion of transaction
– Simultaneously, Great Plains Energy will acquire Aquila, Inc. and
its subsidiaries;
– At closing, Great Plains will retain utility operations in Missouri
Black Hills transaction financing:
– A bridge credit facility through a bank syndication;
– Permanent financing at closing expected
through a combination of
newly-issued
equity, mandatory convertible securities, corporate-level
debt issuance and internally generated cash resources; and
– Based on market conditions, Black Hills intends to issue equity,
equity linked and debt securities in public or private markets and
could execute such transaction prior to closing
Deal expected to close in Q1 2008.
Completion of transaction subject to state regulatory approvals, Federal
Energy Regulatory Commission (FERC) and Federal Trade Commission
(Hart-Scott-Rodino) review, plus customary closing conditions.
Expected to be earnings-accretive after one year of temporary and
transitional costs
Cash flow from acquired operations expected to be positive from start.
Definitive agreements signed February 7, 2007
– 3 –
We are a diversified energy company with our roots in utility operations
dating back to the 1880s. Our strategy is to capitalize on our core strengths:
Strong utility operations with commitment to customer service
Planning, construction and operations of energy assets
Optimization of fuel assets to deliver value to investors and customers
Our search for energy partners led us to evaluate Aquila’s utility operations
in Colorado, Kansas, Nebraska and Iowa:
We share similar demographics, community cultures and business relationships.
The combination of our operations is a logical extension of our business
Acquiring these operations will make us a financially stronger company with
a larger, more diversified asset base and more stable and predictable cash flows
and earnings with opportunity for significant growth in rate base, especially
in Colorado
Benefits of the deal extend to our customers, communities, investors
and employees
How this deal came about
– 4 –
We have the strategy, skills, experience and track record to make this deal work:
Strong utility operations with commitment to superior customer service,
reliability, efficiency, and cost control
Strong planning, construction, integration and maintenance of assets
Strong regulatory relationships
Strong record of technical innovation and environmental safety
Strong tradition of corporate social responsibility
Strong commitment to the communities we serve
Merits of acquisition
– 5 –
Merits of acquisition
The transaction is good for customers, investors and employees:
Customers will benefit from improved economies of scale, operational efficiencies
and integrated business functions
Investors should benefit from expanded operations,
improved cash flow
and earnings, improved
growth potential, improved credit standing and
improved risk profile
Employees will have increased opportunity for personal and professional growth
The transaction is financially sound:
Solid financial foundation
We’re buying earnings-producing assets only
Strong cash flow and earnings base from stable, risk-managed and
geographically diverse operations
We are committed to maintaining, and expect to maintain, an
investment-grade credit rating
– 6 –
Rapid
City
Combination at a glance
Utilities will serve
over 750,000 customers
in South Dakota, Montana,
Wyoming, Colorado, Kansas,
Nebraska and Iowa
Utilities will comprise ~50%
of ~$3 billion in total assets
Wholesale energy operations include
oil and gas production, coal mining,
power generation and energy marketing
Proposed Acquisitions
Utilities in CO, KS,
NE and IA
Black Hills Assets
Utility operations
Power generation
Gas production
Oil production
Coal mine
Energy marketing
– 7 –
Rapid
City
Assets of combination
Profile of the Combined Company
(Based on recent public information)
Total assets ~ $3 Billion
Regulated customers:
Electric 197,000 Customers
Gas
556,000 Customers
Total regulated customers 753,000Customers
Power generation resources:
Regulated, operated 537 MW
Regulated,
contracted 398 MW
Regulated, under construction 90
MW
Independent power production 1,000
MW
Total generation 2,025 MW
Natural gas and oil reserves ~ 170 BCFE
Coal reserves ~ 290 million tons
Natural gas marketing average
daily physical volume 1.4 million
MMBTU
Regulated operations in 7 states
Wholesale energy operations in 12 states
Black Hills Assets
Utility operations
Power generation
Gas production
Oil production
Coal mine
Energy marketing
Acquired Assets
Utilities in CO, KS,
KS, NE and IA
– 8 –
Utilities of combination
DESCRIPTION OF UTILITIES
Number
of Annual
Utility Customers Energy Sales
Black Hills Power 65,000 3.1 million MWH
Cheyenne Light (electric) 39,0000.9 million MWH
Cheyenne Light (gas) 33,0008.1 BCF
Subtotal, existing 137,000 4.0 million
MWH
8.1 BCF
Colorado Electric ( ) 93,0002.0 million MWH
Colorado Gas ( ) 68,000 7.1 BCF
Kansas Gas ( ) 108,00022.5 BCF
Nebraska Gas ( ) 198,00018.0 BCF
Iowa Gas ( ) 149,000 27.3 BCF
Subtotal, new 616,000
2.0 million MWH
74.9 BCF
Total, combined 753,000
6.0 million MWH
83.0 BCF
Seven adjoining states
in
Midwest
and Rockies with
similar demographics and
business environments
Proximity should permit some
consolidation of administrative
functions while retaining
quality of service
Cheyenne
Light
WY
CO
NE
KS
IA
Rapid City
Black Hills Power
SD
MT
– 9 –
COLORADO ELECTRIC FACTS
(2005)
Annual sales volume 1,980GWh
Power generation 102MW
Power contracts 285 MW
Customers 93,000
Annual customer growth >3%
Customer mix
Residential
87%
Commercial
12%
Industrial
1%
Fountain
Pueblo
Rocky
Ford
Cañon
City
Colorado
Colorado electric properties
Territory is experiencing strong population
and load growth
Current RFP seeks 225 MW baseload and
140 MW intermediate and peaking energy
supply beginning in 2013
Potential to construct new coal-fired
power plant and to utilize our Colorado
gas-fired plants to serve long-term needs
and foster off-system sales opportunities
100% fuel and purchased power
pass-through
– 10 –
COLORADO GAS FACTS
(2005)
Annual sales volume 7Bcf
Customers 68,000
Annual customer growth >3%
Customer mix
Residential
94%
Commercial
6%
Industrial
1%
Colorado
Fountain
Pueblo
Burlington
Castle Rock
Colorado gas properties
Territory
experiencing strong
population and customer growth
Proximity to existing Black Hills operations in Colorado
100% fuel pass-through
– 11 –
KANSAS GAS FACTS
(2005)
Annual sales volume 23Bcf
Customers 108,000
Annual customer growth < 1%
Customer mix
Residential
89%
Commercial
9%
Industrial
2%
Lawrence
Goodland
Wichita
Liberal
Garden
City
Dodge City
Kansas
Kansas gas properties
Stable customer counts
Stable cash flows
Rate case filed in November 2006
seeking $7.3 million increase
100% fuel cost pass-through
Other favorable regulatory treatment:
bad debt pass-through, decoupling and
weather normalization
– 12 –
NEBRASKA GAS FACTS
(2005)
Annual sales volume 18Bcf
Customers 198,000
Annual customer growth < 1%
Customer mix
Residential
90%
Commercial
7%
Industrial – 3%
Nebraska gas properties
Stable customer counts
Attractive regulatory environment
Lincoln
is also home to regional
customer service center
Omaha is
headquarters for regional
gas operations center
Rate case
filed in November 2006
seeking $16.3 million
increase
100% fuel cost pass-through
Other favorable
regulatory treatment:
bad debt pass-through
and decoupling
York
Beatrice
Nebraska
Lincoln
Norfolk
Omaha
Blair
Columbus
Bellevue
Wayne
– 13 –
IOWA GAS FACTS
(2005)
Annual sales volume 27Bcf
Customers 149,000
Annual customer growth < 1%
Customer mix
Residential
89%
Commercial
10%
Industrial
1%
Iowa gas properties
Stable customer counts and cash flows
100% fuel cost pass-through
Other favorable
regulatory treatment:
bad debt pass-through,
decoupling and
weather normalization
Newton
West Des Moines
Spencer
Council
Bluffs
Forest City
Decorah
Dubuque
Dennison
Webster City
Iowa
– 14 –
Strategic rationale
Significant scale and scope expansion for Black Hills from utilities and
operations to be acquired
Acquisition represents about 93,000 electric and 523,000 gas customers
Operational efficiency with new resources and larger customer base
Opportunity to advance Black Hills’ relationship-based business
approach and
reputation for superior customer service and
satisfaction
Opportunity to benefit from workforce innovation, adaptability and
business practices
Lower overall business risk
Expanded utility operations provide more stable cash flows
with
more predictable capital needs
Diversifies regulatory and geographic exposure with opportunity to
build
upon Black Hills’ successful regulatory relationship-based
approach
– 15 –
Financial rationale
More stable and predictable financial results
Earnings per share break-even expected after a year of transitional costs following transaction, with
EPS accretion beginning in second full year
Positive cash flows from operations expected immediately
We are acquiring earnings-producing assets only, with stable service territories
in Kansas, Nebraska and Iowa, and with higher growth in Colorado
Constructive regulatory environments; gas cost pass-throughs;
weather-normalization mechanisms
Longer-term upside earnings potential from customer growth and possible
power generation
construction and integration in Colorado
Our intention will be to mirror our strategy
at Cheyenne Light, where
we will be integrating generation
as a rate-base asset later this year
Current Aquila RFP seeks 225 MW baseload and
140MW intermediate
and peaking energy supply beginning
in 2013, and increasing to
290 MW /190 MW, respectively,
by 2022
Potential to construct new coal-fired power plant and to utilize our three
existing Colorado gas-fired plants to serve long-term needs
– 16 –
Financing the acquisition
Initial bridge financing
Commitment for bridge credit facility obtained from bank syndicate, including
ABN AMRO, Credit Suisse, BMO Capital Markets, and Union Bank of CA
Targeted permanent financing
Equity contribution through stock offering;
Mandatory convertible securities offering;
Unsecured corporate debt;
Internally generated cash resources
May fund certain amounts prior to closing based on market conditions.
Logic of financing strategy
Balanced combination of financing sources retains investment-grade
corporate credit rating while
Accelerating accretive cash flow and earnings per share results.
– 17 –
Summary
A sound transaction – strategically, operationally and financially
Attractive, stable, geographically diverse assets with stable or
growing customer bases
Balanced financing strategy with access to capital markets at reasonable rates
Accretive to EPS after one year of transition costs
Improvement in overall corporate risk profile
Expansion of retail footprint and addition of rate-base
assets assure
stable, predictable cash flows
and earnings
Low integration risk:
– Experience with
retail operations and customer care
–
Familiarity with demographics and business environments of new states
– Commitment to relationship-based regulatory processes
Upside potential with vertical integration of electric properties
We are expert planners, builders and operators of power plants
We understand transmission systems and regulatory processes in region
We are committed to remaining an investment-grade Company as we grow
to serve more customers and communities and to build more value for
investors in responsible, safe and
environmentally conscious ways.
– 18 –
INVESTOR RELATIONS
Mark T. Thies, Executive Vice President & CFO
Dale Jahr, Director of Investor Relations
625 Ninth Street Rapid
City, SD 57701
605 721 2326 djahr@bh-corp.com
Please visit our web site for
up-to-date investor news
and information:
www.blackhillscorporation.com
Click on “Investor Relations”
and follow instructions to review,
download or print press releases,
SEC documents, recent presentations,
annual report
and other publications.
– 19 –
Black Hills Corporation in brief
We are a diversified energy company with retail and wholesale
operations in 12 states, extending from the Midwest to the West
Coast. Corporate headquarters are in Rapid City, SD with wholesale
energy subsidiary offices in Golden, CO.
Black Hills Power. Our legacy electric utility serves 65,000 customers
primarily located in
western South Dakota, and also serves parts of
Wyoming and Montana.
Cheyenne Light, Fuel & Power. Acquired in 2005, this gas and electric
utility serves 39,000
electric and 33,000 gas customers in Cheyenne and
parts of Laramie County, WY.
Black Hills Exploration and Production. Our oil and gas operations had
~170 BCFE of proven
natural gas and oil reserves
at YE 2005. About 82% of total reserves are gas. Production in
2005 was 13.7 BCFE. Primary operations are in San Juan Basin (NM),
Piceance Basin (CO) and Powder River Basin (WY).
Black Hills Generation. We operate 1000 MW of independent power
production (IPP), primarily
in Wyoming, Colorado, Nevada and California.
Most of the fleet serves peaking and intermediate load. Over 95% is under
contract with load-serving utilities.
Wyodak Resources. Our coal mine has ~290 million tons of reserves in
the Powder River
Basin of Wyoming. 2005 production was 4.7 million tons.
Most of the coal production fuels power plants at the mine.
Enserco Energy. Energy marketing is concentrated in the Rocky
Mountain region. We offer producer,
origination, transportation and storage
services out of our Golden, CO office, with a branch office
in Calgary, Alberta. Average daily physical gas volumes in 2005 were
about 1.4 million MMBTU. Enserco also began oil marketing services in
2006.
DIVERSIFIED ENERGY ASSETS
BLACK HILLS CORPORATION
has agreed to acquire
AQUILA’S UTILITY OPERATIONS
IN COLORADO, KANSAS,
NEBRASKA
AND IOWA
Transaction Overview
Black Hills to acquire utility properties
On February
7, 2007, Black Hills Corporation (NYSE: BKH)
announced
definitive agreements to acquire certain Aquila utility
operations in Colorado, Kansas, Nebraska and Iowa, subject to
regulatory and other approvals and customary closing conditions.
The deal
is expected to be completed in about a year, for a
purchase
price of $940 million, subject to working capital
adjustments at closing.
Black Hills
has obtained a bridge financing commitment in
advance of
permanent financing. We expect to finance the deal
with a combination of equity, mandatory convertible securities,
corporate-level debt, and internally generated cash resources.
We expect to maintain our investment-grade credit rating.
(Based on recent public information)
Total assets ~ $3 Billion
Regulated customers:
Electric 197,000Customers
Gas 556,000Customers
Total regulated customers 753,000 Customers
Power generation resources:
Regulated, operated 537
MW
Regulated, contracted 398
MW
Regulated, under construction 90 MW
Independent power production 1,000 MW
Total generation resources 2,025 MW
Natural gas and oil reserves ~ 170 BCFE
Coal reserves ~ 290 Million tons
Natural gas marketing average
daily physical volume 1.4 Million MMBTU
Regulated utility operations in 7 states
Wholesale energy operations in 12 states
DEFINITIVE AGREEMENTS REACHED
A LOOK AT THE COMBINED COMPANY
February 2007
www.blackhillscorp.com
Black Hills Assets
Utility operations
Power generation
Gas production
Oil production
Coal mine
Energy marketing
We’re here to serve.
Black Hills Corporation has signed
definitive agreements to
acquire
certain utility assets of Aquila, Inc.
located in Colorado, Kansas,
Nebraska and Iowa, with Great Plains
Energy, of Kansas City, Missouri,
separately acquiring Aquila’s other
utility assets in Missouri. The deal
is
subject to various regulatory and
other approvals and customary closing conditions. We strongly
believe this transaction serves the interests of our customers,
communities, employees and investors alike.
The merits of the transaction are strategic, economic and public-
minded. Acquiring these assets will strengthen our utility
operations, enhance resource planning and utilization, increase
operating efficiency and help us improve financial performance.
Black Hills has a long history of successfully partnering with the
communities we serve. That record includes high levels of
customer service satisfaction and value-priced energy products.
It also speaks to our commitment to our friends and neighbors,
with whom we volunteer our time and efforts and make financial
contributions to make our communities’ civic, charitable and
philanthropic organizations successful.
We invest for the long run, and the proposed acquisition of
these fine utility assets will provide opportunities to grow and
to create value for shareholders while providing safe, reliable
and
economical energy to our customers.
We look forward to serving more customers, in more ways, and
thereby creating more value for them, our shareholders and our
other constituents in the years ahead.
Thank you for your interest and support!
STRATEGIC RATIONALE
This brochure
includes “forward-looking statements” as defined
by the Securities and Exchange Commission. These statements
concern our plans, expectations and objectives for future
operations. All statements, other than statements of historical facts,
included in the presentation that address activities, events or
developments that we expect, believe or anticipate will or may
occur in the future are forward-looking statements. They are
based on assumptions which we believe are reasonable
based
on current expectations and projections about future events and
industry conditions and trends affecting our business. However,
whether actual results and developments conform to our
expectations and predictions is subject to a number
of risks and
uncertainties which could cause actual results to differ materially
from those contained in the forward-looking statements. Please
refer to cautionary language provided in our February 7, 2007
press release on the proposed acquisition
of assets, as well as
our SEC Form 10-K, Form 10-Q and other public disclosures.
Caution on forward-looking statements
COMBINED RETAIL PRESENCE
Expanded customer base and diverse contiguous geographic
territory enhances financial stability and operating efficiencies.
Proven Black Hills/Cheyenne business model applicable
in new service territories which have similar customer and
community profiles.
Lowers overall business risk through revenue and regulatory
diversification.
Benefits extend to customers, communities, employees and
investors.
Conservatively financed transaction with strong cash flow
and earnings from stable, risk-managed operations.
Longer-term upside potential from possible power generation
construction and integration opportunities in Colorado; up to
300 MW of additional base-load generation could be added to
serve
growing needs of electric utility.
CHAIRMAN’S MESSAGE
DAVID R. EMERY
Chairman, President & CEO
Black Hills Corporation
$940 million all-cash deal; Black Hills expects to maintain
investment-grade credit rating with permanent financing through
a combination of equity, mandatory convertible securities, debt
and internally generated cash resources.
Solid balance sheet supports strong financial foundation.
Stable and predictable cash flows expected: earnings per share
break-even expected after a year of transitional costs, with EPS
accretion beginning in second full year.
Higher-growth utilities in Colorado reflect regional demographics;
stable-growth utilities in Kansas, Nebraska and Iowa.
FINANCIAL DETAILS AND RATIONALE
Acquired gas utilities in Colorado, Kansas,
Nebraska and Iowa
Acquired electric utility in Colorado
Seven utilities would serve
about 750,000 customers
in adjoining states in the
Midwest and Rocky Mountains.
Cheyenne
Light
WY
CO
NE
KS
IA
Rapid City
Black Hills Power
SD
MT