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Sempra offer for IEnova public shares in gas infrastructure overhaul runs to May 24

Highlights

Exchange ratio adjusted since announcement

Mexican subsidiary operates Energia Costa Azul

Houston — Sempra Energy slightly adjusted its tender offer for all of the outstanding shares of its Mexican IEnova subsidiary that it doesn't already own.

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The stock-for-stock exchange formally launched April 26 is part of a series of transactions by the San Diego-based power provider to simplify how it operates its non-utility energy infrastructure, including midstream gas and LNG assets.

Among other things, IEnova is the operator of Energia Costa Azul on Mexico's Pacific Coast, where liquefaction capabilities are being added to the existing regasification facility.

When the plans were announced in December, Sempra said it would offer 0.0313 shares of its stock for each share of IEnova stock . The formal offer calls for Sempra to exchange each outstanding IEnova share that it does not own for 0.0323 shares of Sempra stock. The exchange offer will expire May 24 unless it is extended, Sempra said in a statement.

Sempra has previously said it hoped to complete the exchange by the end of June. During an investor call in February, IEnova executives said the company's board and external advisers were reviewing the tender offer. They did not state a company position at the time. The tender was originally announced a day after Sempra presented a nonbinding offer to IEnova that it said represented a premium to what IEnova shares had been trading at on average over the previous month.

As part of its overall simplification plans, Sempra created a new business unit, Sempra Infrastructure Partners, that will focus on the development and construction of North American LNG export infrastructure, natural gas infrastructure and renewable energy generation. Earlier in April, Sempra agreed to sell a 20% stake in the new unit to private equity firm KKR for $3.37 billion in cash.

The unit includes Sempra's LNG portfolio, which at full buildout would consist of 45 million mt/year of capacity. The unit also encompasses certain natural gas distribution assets and cross-border and in-country pipelines, including those that export US natural gas to Mexico and supply Energia Costa Azul. Final investment decisions have not yet been made for expanding Cameron LNG in Louisiana beyond its current three trains or building Port Arthur LNG in Texas.

About 4 GW of renewable energy generation in development, construction or operation in Mexico and related electric transmission infrastructure were put under the Sempra Infrastructure Partners umbrella as well.

Under the current ownership structure of the ECA liquefaction project, Sempra and IEnova each hold 42%, with France's Total holding the remaining 16% stake. Total is also an offtaker on the project. A pipeline on the Mexican side of the border is being built to provide gas to the facility. The liquefaction project will allow the operator to extend the useful life of the existing terminal, which continues to be wholly owned by IEnova.

Sempra sees the move to put IEnova under a single platform as a nod to Mexican investors about the importance of the country in its natural gas and LNG expansion plans.