Lazard Middle Market Advised CH Energy Group on its Sale
of Certain Assets of Griffith Energy Services to Superior Plus
TRANSACTION DESCRIPTION
Lazard Middle Market advised CH Energy Group, Inc. on the sale of certain operating divisions of its subsidiary, Griffith Energy Services, to Canadian-based Superior Plus Corp. for $76 million before closing adjustments.
TRANSACTION HIGHLIGHTS
Griffith Energy Services, a subsidiary of CH Energy Group, Inc. (NYSE: CHG), closed on the sale of select operating divisions serving markets in Rhode Island, Connecticut and Pennsylvania as part of a strategic streamlining that reduced cash flow volatility and will allow the fuel oil delivery firm to focus on its Mid-Atlantic operations. Superior Plus acquired approximately 47,000 customers in the deal.
“We’re extremely pleased that this sale resulted in a gain of approximately $6.5 million after taxes, or approximately 40 cents per share,” said CH Energy Group Chairman, President and Chief Executive Officer Steven V. Lant.
Under the accounting standards applicable to partial divestiture of a business unit, the transaction also results in the accelerated recovery of approximately $10 million of goodwill. That recovery of goodwill reduces the book value of the portion of Griffith’s businesses that it will continue to own, he added.
“The sale of these selected operations followed an approximately year-long strategic review of how to not only best optimize Griffith’s strengths in its most advantageous markets, but how to also ‘right size’ the investments we hold in the fuel oil delivery industry within CH Energy Group’s portfolio of business units,” Lant said. He explained that the sale had three major benefits: 1) it consolidated Griffith’s operations in the strongest market area, 2) it reduced cash flow volatility associated with wholesale oil prices and 3) it produced a gain for shareholders.
“The gain on this transaction surely reflects the value added by Griffith’s management team,” said Lant. “The combination of strong customer service, efficient operations, profitable acquisitions and successful marketing strategies has paid off and increased the value of these divisions as reflected in the sale price,” he said.
Lant said that Griffith, which will retain approximately 61,000 customers throughout several Mid-Atlantic states, will continue to expand as appropriate within that region through selected “tuck-in” acquisitions. “Our team at Griffith has a proven track record and long-standing presence in the Mid-Atlantic market, and going forward we are confident that they will continue to add value to our investments,” he said.
THE SELLER
CH Energy Group, Inc. (www.chenergygroup.com) is a family of companies seizing new opportunities in the energy marketplace through two primary subsidiaries: Central Hudson Gas & Electric Corporation is a regulated transmission and distribution utility serving approximately 300,000 electric and about 74,000 natural gas customers in eight counties of New York State’s Mid-Hudson River Valley, and delivering natural gas and electricity in a 2,600-square-mile service territory that extends north from the suburbs of metropolitan New York City to the Capital District at Albany. Central Hudson Enterprises Corporation, a non-regulated subsidiary, is the umbrella for a family of energy-related companies and investments focused primarily on fuel distribution and renewable energy. Until this transaction is completed, Griffith Energy Service’s fuel distribution business supplies energy products and services to approximately 108,000 customers in 10 states, stretching from Rhode Island to the Washington, D.C. area. CHEC also has interests in a Lexington, Neb., ethanol plant and several renewable energy projects in the Northeast.
THE BUYER
Superior is a diversified corporation. Superior holds 100% of Superior Plus LP (www.superiorplus.ca), a limited partnership formed between Superior General Partner Inc., as general partner and Superior as limited partner. Superior is focused on stability of dividends with value growth. Superior Plus LP consists of three primary operating businesses: Energy Services includes the distribution of propane and distillates and related fixed-price energy services; Specialty Chemicals includes the manufacture and sale of specialty chemicals; and Construction Products Distribution includes the distribution of specialty construction products.
ABOUT LAZARD MIDDLE MARKET
Lazard Middle Market LLC (www.lazardmm.com), a subsidiary of Lazard Ltd (NYSE:LAZ), provides advice on strategic planning and M&A, private placements, capital raising, and restructurings to the middle market. Lazard Middle Market’s investment bankers operate with full access to the industry expertise, senior board-level relationships, and local perspectives of Lazard’s bankers in 39 cities across 24 countries in North America, Europe, Asia, Australia, Central and South America.
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