January 23, 2022

Utility management company sold after signing $10 million contract with Bahamas

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365x235xPS-image1-default-client-sidebar-image-1.jpg.pagespeed.ic.Y1KVg7o5wQBy K. Quincy Parker Nassau Guardian Business Editor From Caribbean News Now

NASSAU, Bahamas — Just over two weeks after PowerSecure International signed a management service agreement (MSA) with the Bahamas government to transform the electricity sector, that company has been sold to Atlanta-based Southern Company for $431 million. Under the terms of the deal, PowerSecure — based in Wake Forest, North Carolina — will become a wholly owned subsidiary of Southern Company.

The company has been hired, for a minimum of $10 million and possibly as much as $25 million, to manage electricity generation, transmission and distribution for Bahamas Power and Light (BPL), the new power company wholly owned by the debt-strangled Bahamas Electricity Corporation (BEC).Requests for information sent to PowerSecure had not been answered up to press time, and it is as yet unclear how — if at all — the acquisition will affect the work PowerSecure has contracted to do.

The base compensation for the five-year contract is $2 million per year, and BPL must achieve predefined key performance indicators (KPIs) related to cost reductions, reliability improvements and customer service enhancements in order for PowerSecure to receive “potential additional performance-based compensation”.

The deal raises a number of questions, beginning with what the purchase might mean for BPL. And equally fundamental — was the government aware of the possibility of this deal during negotiations with PowerSecure? Does the sale mean the government’s timelines will be altered or affected at all?

Industry insiders also query how much time working out the details of a merger this large will leave PowerSecure executives to focus on BPL, and what the deal might say about Southern Company’s ambitions for the Caribbean.

Much as Baha Mar was intended to be a signature calling card for the Chinese construction and hospitality industry on this side of the globe, it is assumed that PowerSecure had counted on its success with BPL to be its calling card in the region. Purchasing the company now gives Southern Company a stronghold in the Caribbean, but to what end remains to be seen.

The Deal

The relationship between the two companies is a close one. Indeed, the new CEO of BPL, Jeff Wallace, spent the past ten years as Southern Company’s vice president of fuel procurement. And on a conference call with investors on Friday, PowerSecure CEO Sidney Hinton spoke to that closeness.

“Southern Company is where several of the leaders at PowerSecure, including myself, started our careers, and we have personal experience with this outstanding leadership team,” Hinton said.

In a statement announcing the deal, Southern Company chairman, president and CEO Thomas A. Fanning said, “As energy technologies and customer expectations continue to evolve, the electric utility business model is increasingly expanding beyond the meter.

“Today there is demand for distributed infrastructure solutions that best meet each customer’s unique energy needs. With the addition of PowerSecure to Southern Company, we’re extending our commitment to create America’s energy future by tapping into industry-leading expertise to deliver cutting-edge solutions to energy consumers nationwide.”

Writing in Forbes, analyst William Pentland reported that Southern Company operates regulated electric utilities in Alabama, Georgia, Mississippi and Florida, and opined that PowerSecure is “arguably the most successful distributed energy company in the United States”.

On Friday’s conference call, Hinton spoke to the aptness of the partnership.

“Today is a very exciting day for PowerSecure. It’s exciting because of the validation it provides for the value we deliver to our customers every day, and it’s exciting because this acquisition represents the beginning of an even more exciting future for PowerSecure. This transaction will allow for PowerSecure new opportunities and the benefits of a much stronger financial platform as part of the Southern Company.”

Hinton told investors he expected that the acquisition will close by the end of the second quarter.

After closing, the companies anticipate that PowerSecure’s operations, including its management team and corporate headquarters, will continue to be based in Wake Forest, NC.

“Until then, we will be focused on continuing to deliver world-class solutions and customer service to our customers,” he said.

The PowerSecure CEO said Southern Company had earned a reputation as one of America’s premier utilities by deploying its technical expertise and financial strength to best serve customers. He said those attributes, combined with Southern Company’s nationally recognized customer service, make Southern Company the ideal partner for PowerSecure to deliver even greater value to its customers.

“We are incredibly excited about the potential to accelerate and expand our business as part of Southern Company as we continue to serve our data center, hospital, utility and other customers,” he said.

Under the terms of the agreement, PowerSecure’s stockholders will be entitled to receive $18.75 in cash for each share of PowerSecure common stock in a transaction with a purchase price of approximately $431 million.

Completion of the transaction is conditioned upon, among other things, the approval of PowerSecure stockholders. The transaction is also subject to the notification and clearance and reporting requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The companies expect to complete the transaction by the end of the second quarter of 2016.

PowerSecure is one of the few companies in the distributed generation space that has sustained strong and largely uninterrupted growth in recent years.

Like other investor-owned utilities, Southern Company has been on something of a buying spree over the past year. Last year, the utility made a $12 billion offer for the gas utility AGL Resources, which is expected to close later this year.

For more on this story go to: http://www.caribbeannewsnow.com/headline-Utility-management-company-sold-after-signing-$10-million-contract-with-Bahamas-29477.html

IMAGE: Power Secure logo

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