Nova Scotia Power’s sister company sold in billion-dollar deal
Emera, the parent company to Nova Scotia Power, has sold one of its American utilities for $1.25 billion US.
In a news release this week, Emera announced the sale of New Mexico Gas Company to Bernhard Capital Partners, a private-equity firm based in Baton Rouge, La.
The sale is pending regulatory approval in New Mexico.
Emera president Scott Balfour is quoted in the news release saying the sale strengthens Emera’s balance sheet and supports its “ambitious capital plan.”
That plan, as the company has previously described, includes spending $9 billion over the next two years to grow its operations, primarily in Florida.
Halifax-based Emera owns or has a stake in about a dozen operations related to energy generation, transmission and distribution in Atlantic Canada, the United States and the Caribbean.
Emera has owned and operated New Mexico Gas since 2016. In announcing the sale, Emera touted growth under its ownership.
New Mexico Gas grew in terms of the number of customers it serves, but its earnings dropped $14 million last year, according to Emera’s latest financial report, and the company has about $500 million US in debt, which will be acquired by the new owner.
Selling assets to raise capital
Balfour told CBC News in an email the sale is part of Emera’s strategy to sell some of its assets as an economical approach to raising money in the face of high interest rates. The company was aiming to raise 15 per cent of its $9-billion goal.
Balfour did not directly respond to a question about whether Emera is considering selling any of its other utilities, particularly Nova Scotia Power.
Instead, he said the sale of New Mexico Gas, along with the sale of shares in the Labrador-Island Link earlier this year for over $1 billion, put Emera well above its 15 per cent target.
Focusing on reliability and decarbonization
“Nova Scotia is our home and Nova Scotia Power is one of our core utilities,” he added.
“We’re experiencing growth in Nova Scotia, and the team at Nova Scotia Power is focused on investing in strengthening the reliability of the grid and supporting the province’s decarbonization goals.”
Poor reliability is a persistent complaint from Nova Scotia Power customers, and getting off coal and doubling renewable energy use by the end of the decade is a major undertaking.
Adam Fremeth, an associate professor at the University of Western Ontario’s Ivey Business School, agreed with Emera’s statement that the sale will bolster the balance sheet. He said realigning a portfolio of subsidiaries is typical of a holding company such as Emera, especially one looking to improve its performance.
Fremeth highlighted that Emera’s stock price has been “relatively flat” since 2016, growing only 2.5 per cent.
He said the sale of New Mexico Gas should not have any direct impact on Nova Scotia Power, except for the possibility of Emera dedicating some of the money it earned from the sale to operations in its home province.
