LPSC reverses stance, approves sale of Cleco

PINEVILLE – Late Monday, the Louisiana Public Service Comission voted to approve the sale of Cleco Corporation to a group of North American infrastructure investors led by Macquarie Infrasctuructre and Real Assets and British Columbia Investment Management Corporation, with John Hancock Financial and other infrastructure investors – collectively, the investor group.
The $4.9 billion deal to buy the parent of regulated electric utility Cleco Power LLC was able to go through after Commissioner Foster Campbell flipped his position after negotiating from the dais during the hearing.
The PSC had rejected the transaction in February. Now, the purchase will close sometime in April.
“I think we did a pretty good deal,” said Campbell, a Bossier Parish Democrat who is running for the U.S. Senate.
“We are pleased with the outcome of the vote and thank the LPSC and staff for their hard work and confidence in our future,” said Darren Olagues, president of Cleco Power. “We also recognize the work of all parties who participated in the regulatory process. This process produced a transaction that is unprecedented in its protections and commitments to all of those who depend on us each day. We look forward to pursuing upcoming opportunities with our new owners.”
As part of the sale agreement, Cleco agreed not to raise its rates — currently the highest in the state — until 2020, while also agreeing to pay Cleco’s 286,000 customers an average of $500 each — which could translate into a month or two free electricity or lower monthly bills for the next few years.
Cleco sells electricity to customers in parts of the parishes on the north shore of Lake Pontchartrain, in Acadiana — including Crowley — and over much of central Louisiana.
Three of the five elected PSC members were needed to overturn their previous rejection and to approve the sale.
In the end, four of the commissioners voted to approve the transaction, while PSC Chairman Clyde Holloway, R-Forest Hill, voted against.
The Macquarie investors will buy at a 15 percent premium, about $55.37 per share, all of Cleco’s stock, then take the 80-year-old company private. Cleco is the last shareholder-owned, Louisiana-based company that operates only in this state.
In the hours before the PSC convened Monday’s hearing, the Cleco buyers sweetened their offer.
Andrew Chapman, of Macquarie, said the buyers would put $136 million into escrow at closing. The commissioners could then decide how the money is distributed.
The PSC could apply the money against monthly bills — about $500 for every Cleco customer — all at once, or over the next two years, or spread over the next five years.