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TheStreet Open House

NorthWestern Energy Agrees To Acquire Hydroelectric Facilities From PPL Montana

Once the transaction is completed, it is expected that NorthWestern will be able to provide nearly all of Montana's required power supply during light load periods, while using market purchases or other resources to meet demand during heavier load periods.  These assets will be added to the rate base in Montana in keeping with NorthWestern's long-standing commitment to being a regulated utility.

Transaction Terms

The proposed transaction is an asset acquisition for $900 million in cash. The purchase price is subject to adjustment for proration of operating expenses, performance of capital expenditures and termination of certain power purchase agreements. 

NorthWestern expects to fund the acquisition using a combination of debt securities, equity and available cash and to maintain its targeted debt to capital ratio of 50 – 55%, supporting a solid investment grade credit profile. Financing is supported by a fully committed bridge loan facility with Credit Suisse and Bank of America Merrill Lynch.  

The transaction is expected to be accretive to NorthWestern's earnings within the first full year of operation following the closing. The transaction is not expected to change NorthWestern's targeted 60 – 70% dividend payout ratio.

The acquisition is subject to customary closing conditions and regulatory approval from the Montana Public Service Commission, the Federal Energy Regulatory Commission, other appropriate state and federal agencies and as required by the Hart-Scott-Rodino Antitrust Improvements Act. NorthWestern and PPL will work with regulators to move through the review process efficiently. Assuming receipt of regulatory approvals and satisfaction of the other closing conditions, the acquisition is expected to close in the second half of 2014.

Advisors

In connection with the transaction, Credit Suisse acted as lead financial advisor and Bank of America Merrill Lynch acted as financial advisor to NorthWestern Energy.   Skadden, Arps, Slate, Meagher & Flom LLP served as lead legal counsel to NorthWestern Energy and Dorsey & Whitney served as environmental counsel.    Blackstone Advisory Partners rendered a fairness opinion to NorthWestern's Board of Directors.

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