Energy Savings to acquire ...... Just Energy
Energy Savings Income Fund (C:SIF)
Shares Issued 98,082,535
Last Close SIF.UN 5/16/2007 $15.54
Thursday May 17 2007 - News Release
Mr. Brennan Mulcahy reports
ENERGY SAVINGS ENTERS THE TEXAS ELECTRICITY MARKET THROUGH ACQUISITION OF BILLING, SUPPLY AND MARKETING PLATFORM OF JUST ENERGY
Energy Savings Income Fund has signed a definitive agreement for the purchase of the partnership units of Just Energy Texas LP, a Texas marketer of deregulated electricity. Houston-based Just Energy was founded in 2002, and has established a full-featured, utility-compliant billing platform, as well as a supply procurement and marketing platform. The Just Energy management team and employees will join Energy Savings, leading the pursuit of continued growth in Texas, as well as further expansion elsewhere in the United States.
The transaction calls for the payment of $34-million (U.S.) at closing ($16-million (U.S.) in cash and the issuance of $18-million (U.S.) in Energy Savings Income Fund units). These units will, based on certain obligations, vest over a three-year period.
Just Energy currently serves residential, small-sized and medium-sized commercial customers that represent approximately 130,000 RCEs. These contracts will become part of Energy Savings' long-term customer base as they are converted to Energy Savings contracts by the fund's soon-to-be-established team of marketing agents.
Chief executive officer Brennan Mulcahy noted: "The Texas market is composed of more than 20 million residential and small commercial customer equivalents. Despite a very active deregulated market, a low number of these customers are on long-term fixed price contracts. We view this as the top new market opportunity available in North America.
"We have delayed entry into Texas pending the establishment of a billing and collection relationship with a proven partner. The purchase of Just Energy gives us both a billing and collection engine, as well as adding proven Texas operators to the Energy Savings management team."
Scott Gahn, chief executive officer of Just Energy, stated: "We at Just Energy are very pleased to join the Energy Savings group. When we were approached, we saw a substantial partner to aid in our continued growth. It was clear from the outset that the Energy Savings team shared our entrepreneurial spirit and had the drive for market leadership that we were looking for. We believe the combined team has the capability of building the same leading market share in Texas that Energy Savings owns in its other jurisdictions.
Chair Rebecca MacDonald added: "Energy Savings has an acquisition policy that requires purchases to be accretive to unitholders. This acquisition meets this criterion in two ways. First, the cash flow from the conversion of Just Energy customers to long-term contracts should justify the purchase price. Second, we save on future capital expenditures by gaining an immediate entry into a lucrative market without the need to spend to develop our own IT systems and billing platform."
© 2007 Canjex Publishing Ltd.