The acquisition of South Jersey Industries by the Infrastructure Investments Fund, a JPMorgan-backed investment firm, was unanimously approved Wednesday by the New Jersey Board of Public Utilities, the final approval needed in the deal.
The deal, which has been estimated to be valued at approximately $8.1 billion, is expected to become official Feb 1. As a result of the transaction, shares of common stock of SJI, at $1.25 par value per share, will cease to be listed for trading on the New York Stock Exchange.
South Jersey Industries is comprised of South Jersey Gas, based in Atlantic City, and Elizabethtown Gas, based in Union.
The BPU approved the transaction via a settlement agreement between SJI, IIF, BPU staff, the New Jersey Division of Rate Counsel, Environmental Defense Fund and other parties. As part of the settlement, the gas utilities have committed to undertake programs that will reduce greenhouse gas emissions and enhance transparency and accountability.
IIF and SJI, in a joint statement, obviously were pleased by the approval.
“We are pleased that the New Jersey BPU recognizes the significant benefits this partnership presents for the communities in which SJI operates,” they said.
As part of the settlement, the gas utilities have committed to undertake programs that will reduce greenhouse gas emissions and enhance transparency and accountability, including:
- Developing a nonpipeline alternatives program by which the utilities will assess building electrification, energy efficiency and other options alongside traditional gas investments to meet demand;
- Creating transparency around the scale of gas system expansion and the costs of continuing to expand the gas pipeline system;
- Implementing a process to address gas leak inequities through analysis and remediation of gas leaks in overburdened communities;
- Improving transparency through comprehensive annual greenhouse gas emissions reporting by the utilities;
- Demonstrating the importance of developing a careful review process regarding biomethane, or RNG, and hydrogen investments by gas utilities, to ensure that such projects are consistent with state climate goals and not harmful to overburdened communities;
- Ensuring consideration of state climate policy in any future Infrastructure Investment Program proposals by the utilities.
SJI officials said the company already has made the following commitments, among others:
- $75 million in financial benefits for Elizabethtown Gas and South Jersey Gas customers, including a rate credit to all customers and bill relief for certain accounts in arrears due to the COVID-19 pandemic;
- $5 million in community support contributions, which may include charitable, educational, community support and economic development efforts;
- $2.5 million in contributions to NJ SHARES (not earmarked for Elizabethtown Gas or South Jersey Gas customers), to assist New Jersey’s low-income customers with payment of their utility bills.
In connection with the transaction, SJI also has provided notice to NYSE that it is voluntarily delisting its 5.625% junior subordinated notes due 2079 and its corporate units from the NYSE. A Form 25 with respect to the delisting will be filed on or about Feb. 6.
SJI expects that, prior to the closing of the transaction, SJI’s board of directors will declare a “stub period” dividend as allowed by the terms and provisions of the merger agreement for the transaction. SJI expects that the dividend, as and when declared by the board of directors, will be in an amount equal to $0.1499 per share of common stock (which reflects the most recent regular quarterly dividend rate of $0.3100 per share, divided by 91 days, and multiplied by the number of days from and including Dec. 20, 2022, the day after the record date for the most recent regular quarterly dividend, to and including the day on which the closing of the transaction is expected to occur).
SJI expects that the “stub period” dividend, as and when declared by the board of directors, will be payable to the holders of record of common stock as of the close of business on the last day that common stock is traded on the NYSE, which is expected to be Feb. 1.
