New Mexico
Emera Announces Sale of New Mexico Gas Company to Bernhard Capital Partners
This news release constitutes a “designated news release” for the purposes of Emera’s prospectus supplement dated November 14, 2023, to its short form base shelf prospectus dated October 3, 2023.
HALIFAX, Nova Scotia & BATON ROUGE, La. & ALBUQUERQUE, N.M., August 05, 2024–(BUSINESS WIRE)–Emera Inc. (“Emera”) (TSX:EMA), an international energy and services company, today announced it has entered into an agreement to sell its wholly owned operating company, New Mexico Gas Company, Inc. (“NMGC”), to Bernhard Capital Partners (“BCP”), a services and infrastructure-focused private equity management firm, for an aggregate transaction value of $1.252 billion USD, including the assumption of approximately $500 million USD of debt and subject to customary closing adjustments.
“This transaction strengthens Emera’s balance sheet, supports our ambitious capital plan and reinforces our strategic decision to optimize our portfolio and reallocate capital to our highest growth markets to drive long-term value for our shareholders,” says Scott Balfour, President and CEO, Emera Inc. “New Mexico Gas is a strong regulated utility with a customer-focused team. We’re proud of the work we have done together over the past eight years to drive customer growth and enable nearly $800 million USD in strategic capital investments to expand and maintain a safe, reliable system that will serve New Mexicans for decades to come.”
Emera acquired NMGC as part of its acquisition of the TECO group of companies in 2016. Under Emera’s ownership, NMGC has grown and remains the largest natural gas utility in New Mexico, serving over 545,000 customers and safely managing more than 12,000 miles of transmission and distribution pipelines.
“As an operator of premium electric and gas utilities in high-growth jurisdictions, we have compelling opportunities ahead of us, driven by electrification, decarbonization and the need for increased resilience against climate-related challenges,” adds Balfour. “We will move forward to execute on these opportunities with a stronger balance sheet, a more focused operating model and a disciplined capital investment plan.”
The purchase price and transaction value respectively represent approximately 23x last 12 months earnings and 1.42x rate base. Estimated after-tax net proceeds of approximately $750 million USD will be used to repay holding company debt and support its investment opportunities in its regulated utility businesses. The transaction is expected to improve the company’s CFO to debt metrics by 50 bps and reduce its proportion of holding company leverage by 200 bps.
“This investment directly aligns with Bernhard Capital’s strategy to invest in infrastructure assets and utilities that are critical to building more resilient communities,” says Jeff Jenkins, Founder and Partner at Bernhard Capital Partners. “We value the strong history of New Mexico Gas Company and are committed to retaining the invaluable institutional knowledge of its employees. The leadership team and all employees will remain in place after closing, and we anticipate creating approximately 70 new, local jobs. Our priority is ensuring the continuation of reliable, affordable natural gas service to customers and communities across the state. This agreement also reinforces our commitment to fostering economic opportunities and growth in New Mexico. Albuquerque-based Strategic Management Solutions (SMSI), another BCP portfolio company, has operated in New Mexico for 25 years and generated both positive economic growth and job opportunities across the state.”
BCP has an extensive operation footprint across the United States. It also recently announced agreements to acquire multiple leading natural gas LDCs that serve communities in the Gulf South. To date, BCP has invested in nearly 70 companies across 20 platforms, including several utility companies, that collectively employ approximately 20,000 people globally.
The transaction is subject to regulatory approval by the New Mexico Public Regulation Commission (“NMPRC”) and pursuant to the Hart-Scott-Rodino Antitrust Improvements Act. The transaction is expected to close in late 2025, but will not close before September 30, 2025, unless otherwise authorized by the NMPRC.
J.P. Morgan Securities LLC is acting as exclusive financial advisor to Emera in this transaction. Davis Polk & Wardwell LLP is serving as Emera’s legal advisor. Jefferies LLC is serving as the exclusive financial advisor to Bernhard Capital with Kirkland & Ellis LLP serving as their legal advisor.
About Emera
Emera is a geographically diverse energy and services company headquartered in Halifax, Nova Scotia with approximately $39 billion in assets and 2023 revenues of $7.6 billion. The company primarily invests in regulated electricity generation and electricity and gas transmission and distribution, with a strategic focus on transformation from high carbon to low carbon energy sources. Emera has investments in Canada, the United States and the Caribbean.
About Bernhard Capital Partners
Bernhard Capital Partners is a services and infrastructure-focused private equity management firm established in 2013. Bernhard Capital Partners has deployed capital in four funds across several strategies and has more than $4 billion of gross assets under management. Bernhard Capital Partners seeks to create sustainable value by leveraging its experience in acquiring, operating, and growing services and infrastructure businesses. For more information, visit www.BernhardCapital.com.
Forward Looking Information
This news release contains forward‐looking information within the meaning of applicable securities laws, including statements concerning Bernhard Capital Partners’ acquisition of NMGC and the timing for closing. Undue reliance should not be placed on this forward-looking information, which applies only as of the date hereof. By its nature, forward‐looking information requires Emera to make assumptions and is subject to inherent risks and uncertainties. These statements reflect Emera management’s current beliefs and are based on information currently available to Emera management. There is a risk that predictions, forecasts, conclusions and projections that constitute forward‐looking information will not prove to be accurate, that Emera’s assumptions may not be correct and that actual results may differ materially from such forward‐looking information. Additional detailed information about these assumptions, risks and uncertainties is included in Emera’s securities regulatory filings, including under the heading “Business Risks and Risk Management” in Emera’s annual Management’s Discussion and Analysis, and under the heading “Principal Risks and Uncertainties” in the notes to Emera’s annual and interim financial statements, which can be found on SEDAR+ at www.sedarplus.ca.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240805118025/en/
Contacts
Emera Media
Dina Bartolacci Seely
media@emera.com
Bernhard Capital Partners Media
Ed Trissel / Erik Carlson
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449
New Mexico
Obituary for Carlos Pineda Montoya at West Funeral Home
New Mexico
City seeks developer for property next to Smith’s in SE Albuquerque
According to the city, they’re looking to turn the property into housing and businesses and will even donate the half-acre lot to the winning developer.
ALBUQUERQUE, N.M. — The city is seeking a developer to transform a vacant, city-owned lot next to the Smith’s grocery store near the University of New Mexico in Albuquerque.
The lot is on Yale Boulevard, near Coal Avenue, just north of the Smith’s grocery store in that area. They want to turn that lot into housing and businesses.
The city will even donate the lot to the winning developer.
The property is zoned for housing and businesses, like convenience stores.
You can learn more about it during a webinar Wednesday at 12:30 p.m. Then, developers have until Dec. 5 to submit proposals.
New Mexico
New Mexico’s Free Child-Care Plan Has a Feasibility Gap
Last month, New Mexico’s governor announced that the state would soon become the first in the country to offer universal free child care. This was a momentous development for child-care proponents such as myself, who have long argued that wide-reaching free programs are crucial for parents and for a healthy democracy. Notably, the policy frames child care not as a private service but as necessary social infrastructure—the kind that, like schools and roads and libraries, should be publicly funded and available to everyone, regardless of their income.
Since the announcement, advocates and pundits have been unreserved in their excitement: An article in Bloomberg declared this was proof that “Universal Child Care Doesn’t Have to Be a Fantasy.” A writer for The Nation made the case that other states should establish similar programs. But this victory lap may be premature. New Mexico has many hurdles to overcome before anyone can declare the policy a success—and the state could, after all of this attention, fail to fully deliver on its promise.
Although the universal policy will not take effect until Saturday, New Mexico already has, at least in name, one of the most comprehensive child-care funding programs in the United States. Its current system, which offers free care to families with children ages six weeks to 13 years, does have an income-based cutoff, but it’s a generous one, in effect meaning about 85 percent of children in the state are covered. Within that income band, any family with all parents working or in school part- or full-time qualifies. Those families are then guaranteed what is essentially a voucher, which fully covers fees at any child-care provider participating in the state system.
In practice, though, the state-covered care has been hard for many families to access. Of the roughly 137,000 children under age 5 (the group with the most acute care needs), only about 21,000 actually receive benefits under the current program. Among the remaining kids, some are not eligible; other families take advantage of different care options, such as Head Start or free pre-K, which are run separately and not counted as part of the child-care-voucher program. But plenty of families do qualify, and many of them want free care—yet have been unable to find open slots at participating providers. Roughly two-thirds of kids who currently meet program requirements in the state don’t receive any help.
The obstacles to higher uptake are multifold and stubborn. Among them are a shortage of child-care educators, trouble creating care options that meet families’ needs, some providers’ reluctance to accept state vouchers, and uneven care availability in rural areas. These aren’t the type of problems that can typically be resolved quickly—and they are highly unlikely to be addressed before the new policy kicks off. At least in the immediate term, then, New Mexico stands to remain one of the many states falling short of a pledge to provide free or subsidized care.
Ambitious policies, even those whose aims aren’t fully met, have real value; despite the relatively low uptake, New Mexico’s current plan has been a boon to many families. But scarcity acquires a different symbolic tenor in the context of a commitment to be available for everyone. An unmet promise, particularly one announced with great fanfare, can make people feel duped. Because New Mexico is the only state with a program like this, the stakes are high: The new policy’s rollout, and its successes or stumbles, may shape views on the viability of universal child care across the country.
New Mexico’s new child-care proposal is bold. It will use the same voucher system as the current plan, along with the same age cutoffs for kids and many of the same eligibility requirements, but it will open coverage to families at any income level. In its idealized form, parents across the state (excepting stay-at-home parents) will be able to easily sign up for benefits and access the care they need.
Seeing this vision through, however, will involve a herculean effort: New Mexico will need to hire an estimated 5,000 new educators to work in the system, while maintaining its current labor force, which a representative for the state’s Early Childhood Education and Care Department estimates is roughly 13,000 educators. The state has succeeded at similar child-care recruitment efforts in the past. When Governor Michelle Lujan Grisham was elected, she and other legislative leaders funneled money into the field, and from 2019 to 2024, the number of child-care practitioners in the state grew by 64 percent, department representatives told me. But attracting and training thousands more could take years.
Carrying out this recruitment in the places with the most need may be particularly difficult. New Mexico’s current child-care offerings are geographically lopsided. For example, in many regions the state is low on slots for children under 2 (an average of 32 spaces exist for every 100 children in that age group), but the sparsely populated Union County has no licensed infant slots at all.
For years, New Mexico had a way to address rural child-care needs: by relying on informal providers known as “registered homes,” in which neighbors (or sometimes grandparents and other family members) care for a few children living nearby and are compensated by the government for their labor. In addition to making it easier for families in rural areas to access care close to where they live, registered homes tend to have more flexible hours—a necessity for parents who aren’t working a traditional 9-to-5. Other parents turn to these homes to find providers who share their language or culture.
Yet the number of slots in registered homes has been falling for more than a decade; from 2019 to this year, it plummeted from nearly 13,000 to just over 3,000. The exact reasons for the decline are unclear, but the drop-off may be related to how “confusing” one provider said the process of registering a home was.
The state is aware of these supply limitations. Elizabeth Groginsky, the secretary of New Mexico’s Early Childhood Education and Care Department, told me that her team is launching a campaign to recruit 1,000 new registered homes, working to make the registration process easier, and creating a support network for registered homes’ providers. The department also plans to offer low-interest loans to encourage the construction of new child-care centers and licensed family child-care businesses, and the expansion of existing ones. And it will be increasing the baseline rate at which child-care programs are reimbursed for the children they serve, as well as offering even more to programs that commit to a $16-an-hour wage floor for educators, compared with the state’s minimum wage of $12 an hour.
All of this, though, costs more than the state has set aside. The department will be asking the state legislature for $120 million in additional funding, but the money is not guaranteed to be approved, particularly in the face of budget uncertainty after Congress passed a bill in July that puts new financial burdens on states. Groginsky told me that, no matter what, New Mexico expects to be able to pay for its child-care program through 2026. After that, it’s up to the legislature. This uncertainty has prompted some child-care-center owners—who don’t have to accept state vouchers—to express wariness about participating.
Any major foundering in New Mexico could have long-lasting consequences. Take the case of Quebec, which in 1997 launched a universal, $5-a-day child-care program, whose failures continue to reverberate today. At the time the policy was announced, the province had the capacity to serve only 15 percent of its children. Parent demand for the universal program was much higher, so, to meet it, the province took shortcuts, such as lowering educator qualifications and relying on for-profit providers of questionable quality. Although many kids got great care, others ended up in overcrowded, unclean centers. Evidence suggests that some of the kids in substandard settings may have grown more anxious and less social.
More than a quarter century later, Quebec’s stumbles are still used to argue against expansions of publicly funded child care. In 2021, J. D. Vance co-authored a Wall Street Journal op-ed opposing President Joe Biden’s proposed investments in child care. It took only three paragraphs for Vance to bring up Quebec, asserting that “it was, to put it bluntly, a disaster for Quebec’s children.”
New Mexico doesn’t seem likely to let quality slide in the way Quebec did. The problem, rather, is that the state may not be able to ensure that all families have access to the care they desire. This is where the messaging becomes so important: New Mexico has pledged universal free child care, but it has left itself little wiggle room to explain the time it may take to reach that goal or the challenges that could stand in its way.
Success, then, will depend on whether the state can recruit educators quickly enough, on whether the legislature will continually approve the needed funds, on how many providers opt into the state system, and on how soon families can expect access to the child care they were promised. The state’s program is an admirable gamble—but it is still very much a gamble.
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