Published: December 16, 2022 |

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Southwest Gas Holdings said its board of directors unanimously determined to take strategic actions to simplify the company’s portfolio of businesses. These actions include entering into a definitive agreement to sell 100 percent of MountainWest Pipelines Holding Company to Williams for $1.5 billion. Additionally, the company determined it will pursue a spin-off of its wholly owned subsidiary, Centuri Group to form a new independent publicly traded utility infrastructure services company.

“After carefully evaluating all available alternatives, we are confident that simplifying our corporate structure and creating two focused industry leaders is the right outcome of our strategic review. Southwest Gas will be a leading fully regulated natural gas utility with an optimized balance sheet that will enable continued investment in safety, customer service and infrastructure, and a stable and competitive dividend policy,” said E. Renae Conley, Southwest Gas chair of the board.

“Centuri will benefit from a management team focused on its comprehensive service capabilities, blue-chip customer base and increasing national investments in utility infrastructure, 5G and renewables. The strategic actions we are taking create the opportunity for stockholders to own two leading independent companies poised for long-term sustainable value creation,” added Conley.

“At Southwest Gas, we take pride in the critical responsibility we have to provide reliable, sustainable and affordable energy to our Arizona, Nevada, and California-based customers. These transactions will allow the company to exclusively focus on our obligations to the communities we serve while continuing to exceed customer expectations and build on the significant growth potential we have already started to realize,” said Karen S. Haller, president and chief executive officer of Southwest Gas.

“We have an exciting opportunity to optimize Southwest Gas in order to deliver an expected return on equity of more than 8 percent while continuing to invest in our utility operations and maintaining industry-leading customer satisfaction. We believe that both MountainWest and Centuri will also be best positioned to thrive following the completion of the transactions and have conviction that the strategic decisions we are announcing today will be in the best interest of all stakeholders over the long-term,” added Haller.

Sale of MountainWest

Under the terms of the transaction, Southwest Gas will sell 100 percent of MountainWest to Williams for $1.5 billion in total enterprise value, subject to certain adjustments. Net proceeds will be used to repay the company’s approximately $1.1 billion term loan.

MountainWest operates over 2,000 miles of interstate natural gas pipeline systems primarily located across Utah, Wyoming, and Colorado, totaling approximately 8,031 million dekatherms per day of transmission capacity. MountainWest also holds 56 billion cubic feet of total storage capacity, including Clay Basin, the largest underground storage reservoir in the Rocky Mountain Region.

The transaction is expected to close in 2023, following regulatory approvals and the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Spin-Off of Centuri

The board of directors has unanimously decided to pursue a spin-off of Centuri. Upon completion, the separation will result in two independent publicly traded companies: Southwest Gas and Centuri. The company is taking actions immediately to execute this transaction and plans to begin making necessary filings in the first quarter of 2023.

As a standalone, independent company, Centuri, a utility services platform diversified across the U.S. and Canada, will continue to be an industry leader at the forefront of infrastructure modernization. Centuri is positioned to support the energy transition given its extensive infrastructure capabilities and attractive blue-chip customer base comprised of a diverse range of utilities. With highly recurring revenue underpinned by long-term master service agreements and stable contracts, Centuri is expected to generate strong cash flows to optimize its capital structure, invest in business prospects and provide attractive returns to stockholders.

Centuri has already been operating using a standalone business model and, as such, Southwest Gas is not anticipating any material changes to Centuri’s operations and cost structure, nor is Southwest Gas expecting significant dis-synergies at Southwest Gas or Centuri as a result of the spin-off. Centuri’s cost structure will continue to be evaluated in the ordinary course of management’s review of operations for savings opportunities.

The separation is expected to be completed in approximately 12 months and to be tax free to Southwest Gas and its stockholders for U.S. federal income tax purposes.

About Southwest Gas
Southwest Gas Corporation is a dynamic energy company committed to exceeding the expectations of over 2 million customers throughout Arizona, Nevada, and California by providing safe and reliable service while innovating sustainable energy solutions to fuel the growth in its communities.

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