AltaGas Ltd.

AltaGas issued 2023 guidance: normalized EPS of $1.85-$2.05 and normalized EBITDA of $1.5-$1.6 billion, with a self-funded capital program of about $930 million (excluding asset retirement obligations) and no equity issuance. It plans a 6% dividend increase to $1.12 per share for 2023 and targets 5-7% annual dividend growth through 2027 (extended from 2026). Utilities rate base growth of up to 8-10% a year through 2027 is expected. The sale of the Alaskan Utilities to TriSummit Utilities is expected to close in the first quarter of 2023, and the company reiterates a net debt to EBITDA target below 5.0x with a long-term target of about 4.5x. The text is truncated.

dividend declaration

AltaGas bought the remaining 25.97% of Petrogas from Idemitsu Canada for C$285 million cash, closing July 5, 2022, so it now owns 100% (up from 74% after the December 2020 increase). It was funded mainly by proceeds from the recent sale of its non-operated Aitken Creek interest plus modest short-term credit facility draws, to be repaid later. The company expects it to add more than $0.10 per share to normalized EPS on a full-year basis, leaves 2022 guidance unchanged, and expects the full-year earnings contribution in 2023. Idemitsu stays a customer through the Astomos Energy Joint Venture. The release also refers to a planned sale of the Alaska utilities announced in late May.

business combination

AltaGas issued 2022 guidance: normalized EPS of $1.80-$1.95 and normalized EBITDA of $1.50-$1.55 billion, with a self-funded $995 million capital plan (excluding asset retirement obligations), about 78% for Utilities, and no expectation of issuing equity. It restates the goal of net debt to EBITDA below 5.0x, possibly by the end of 2022 with certain asset sales, and targets 5-7% annual dividend growth through 2026 and 8-10% annual Utilities rate base growth through 2026. It says the U.S. Transportation and Storage business was divested in 2021 (the text gives the second quarter in one place and the first quarter in another) and had contributed about $115 million of 2021 EBITDA, and that Petrogas was acquired a year ago with increased ownership and ability to operate Ferndale. Also released a 2021 ESG report with emissions, diversity and safety goals; the text is truncated.

regulatory community update

AltaGas will raise its annual common dividend 6% to $1.06 per share for 2022, and switch from monthly to quarterly payments of $0.265 in March, June, September and December, with the first due March 31, 2022 (record date March 16), subject to board approval. Monthly payments continue through 2021, with the December dividend of $0.0833 payable December 31, 2021 to holders of record December 22. This is the second yearly increase after the December 2020 rise; the company ties it to its continued focus on reducing debt.

dividend declaration

The filing (headlined as the closing of AltaGas's increased interest in Petrogas, though the visible text is the December 10 release saying closing was still expected around year end) says Canadian Competition Act and Canada Transportation Act clearances were received and that closing will lift AltaGas's ownership of Petrogas to 74%. This follows the January 2020 put option from SAM Holdings and an October 16, 2020 announcement of the increased stake. The same release gives 2021 guidance (normalized EPS $1.45-$1.55, EBITDA $1.4-$1.5 billion, a self-funded $910 million capital plan) and raises the dividend 4% to $0.0833 per month ($1.00 a year) from the December dividend paid January 15, 2021, the first increase since the 2018-19 cut. It also targets net debt/EBITDA below 5x over the medium term, with faster non-core asset sales possibly speeding that up. The text provided is truncated, so the actual closing details are not shown.

business combination

AltaGas said SAM Holdings, which owns about one-third of Petrogas Energy Corp., exercised a put option forcing the AltaGas-Idemitsu joint venture (50% AltaGas, 50% Idemitsu), which owns the other roughly two-thirds, to buy that stake at fair market value set by independent valuators. The joint venture is still evaluating the notice. AltaGas expects to fund its share from internal cash flow, sales of remaining non-core assets and debt, so this adds a new, unpriced funding commitment alongside the planned asset sales.

joint venture update

AltaGas gave 2020 guidance of normalized EPS of $1.20-$1.30 and normalized EBITDA of $1,275-$1,325 million, with a self-funded $900 million capital plan (about 78% Utilities) and no expectation of raising common equity near-term. It also suspended the dividend reinvestment program, so the January 15, 2020 payment is the last eligible, which means the whole reinvestment plan is now suspended until further notice (the premium component was suspended at the end of 2018). The company says about $5 billion of non-core assets have been sold since the WGL acquisition, S&P revised its outlook to stable and affirmed BBB-, and 2020 sales are expected to include its roughly 37% interest in AltaGas Canada Inc. The release says the board will keep assessing the dividend but does not announce a change.

dividend declaration

AltaGas agreed to sell its indirect, non-operating interest in the Central Penn Pipeline (held through WGL Midstream, a 21% indirect interest) to a NextEra Energy Partners subsidiary for about $870 million (US$657 million), expected to close in Q4 2019 subject to regulatory approvals. The company says announced or completed 2019 sales now total about $2.2 billion, above the $1.5-2.0 billion target, and that the distributed generation sale closed in September. This resolves the 2019 asset sales target thread, though the Central Penn deal is still pending.

asset acquisition disposition

AltaGas agreed to sell its U.S. distributed generation portfolio (322 MW of solar and fuel cell assets in 20 states and DC, held through WGL Energy Systems and WGSW) to TerraForm Power, a Brookfield affiliate, for about $940 million (US$720 million), expected to close in Q3 2019. Together with the roughly $379 million Stonewall Gas Gathering System sale earlier in 2019, announced or completed 2019 sales are about $1.3 billion of the $1.5-2.0 billion target set in December 2018, so this continues that program.

asset acquisition disposition

AltaGas completed the sale of its remaining indirect interest of about 55% in its Northwest B.C. hydro facilities for net proceeds of about $1.37 billion (purchase price $1.39 billion before adjustments), to entities tied to Axium Infrastructure and Manulife, the same buyers of the 35% stake in June 2018. AltaGas says it has now monetized $3.8 billion of non-core assets since the WGL closing in July 2018, ahead of the roughly $2 billion originally targeted. In December 2018 it announced plans to sell a further $1.5 to $2.0 billion of non-core assets in 2019, with proceeds usable to reduce debt and fund growth. The company is now fully out of the hydro facilities and describes a focus on Midstream and U.S. Utilities; the release names Randy Crawford as President and CEO.

asset acquisition disposition

AltaGas declared its January 2019 monthly dividend of $0.08 per common share, payable February 15, 2019 to holders of record January 25, 2019. That is down sharply from the $0.1825 paid through the October 2018 declaration, so the dividend has been cut (the filing itself does not explain the reduction or give the date of the decision). The filing also notes that on October 30, 2018 the board suspended the Premium Dividend component of the reinvestment plan, effective December 18, 2018; the 3% discount reinvestment component continues.

dividend declaration

AltaGas agreed with Black Swan Energy to buy a 50% interest in the Aitken Creek gas processing plants in northeast B.C. (the 110 MMcf/d North Aitken Creek plant and a 100 MMcf/d plant under construction), with long-term processing, transportation and marketing agreements. Total AltaGas investment is expected at about $230 million, including $136 million in 2018, about $50 million in Q4 2019 and $40 million in 2019 for new liquids handling infrastructure; closing is expected in early October 2018. The deal expands the Montney gas business and supports supply for the Ridley Island propane terminal, with more than 50% of Black Swan's North Pine propane to be exported through it. It also triggers expanding North Pine fractionation from 10,000 to 20,000 bbl/d. This is growth spending alongside the asset sales; the release names David Cornhill as Chairman and interim co-CEO.

business combination

AltaGas declared its September monthly dividend of $0.1825 per common share, payable October 15, 2018 to holders of record September 25, 2018, unchanged from prior months. The same filing also carried a separate release announcing agreements to sell non-core assets for about $560 million in total: roughly $165 million to Birch Hill Equity Partners (smaller Canadian midstream and power assets, the commercial and industrial customer portfolio, and its 43.7 million Tidewater Midstream shares) and about US$300 million (about C$400 million) to Middle River Power III for the Tracy, Hanford and Henrietta plants in California (523 MW). The proceeds are meant to repay a significant portion of the WGL bridge facility; AltaGas says announced or completed asset sales now total about $1.5 billion against a target of at least $2 billion by fourth quarter 2018. Both sales still need regulatory and other approvals, with the Canadian deal expected by year-end and the California deal in Q4 2018. This continues the bridge repayment effort begun with the June hydro stake sale.

dividend declaration

AltaGas closed its approximately $9 billion acquisition of WGL Holdings; WGL shareholders receive US$88.25 in cash per share and WGL's stock is being delisted from the NYSE. AltaGas drew US$2.3 billion on its US$3 billion bridge facility at closing and says it expects to repay that quickly through further asset sales and senior debt and hybrid securities offerings. Subscription receipts converted into common shares, and Terry McCallister retires as WGL CEO, with Adrian Chapman succeeding him as head of Washington Gas.

business combination

AltaGas and the other parties accepted the DC commission's June 29, 2018 written order, so all approvals needed for the WGL acquisition are now in hand and closing is scheduled for July 6, 2018. The settlement commits about $41 million in direct benefits to the District of Columbia. Each AltaGas subscription receipt will convert into one common share, with a final dividend-equivalent payment of $0.1825 per receipt.

regulatory community update

The Public Service Commission of the District of Columbia said orally that it will approve the AltaGas acquisition of WGL Holdings, with some modifications to the May 8, 2018 settlement agreement. AltaGas said final approval follows once the settling parties accept the written conditions within five days. This is a step toward closing the deal that the hydro stake sale was funding.

business combination

AltaGas closed the sale of a 35 percent indirect stake in its Northwest British Columbia hydro facilities for $922 million (implying $2.6 billion for 100 percent), to a joint venture indirectly owned by Axium Infrastructure and Manulife. AltaGas stays the majority holder and keeps running the facilities. The sale is part of funding the pending WGL Holdings acquisition and is described as almost half of the roughly $2 billion of asset sales to be raised.

asset acquisition disposition