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Sempra, RBS JV To Sell Retail Commodity Marketing Unit To Noble Group - Update

Sempra Energy (SRE) Monday revealed an agreement to sell the retail commodity marketing arm of its joint venture with Royal Bank of Scotland Group plc (RBS,RBS.L) to Hong Kong-based Noble Group Ltd. (NOBGF.PK) for $317 million in cash. Noble has also agreed to assume $265 million in the unit's debt.

The unit Sempra Energy Solutions is the US retail commodity marketing arm of both companies' joint venture RBS Sempra Commodities. It employs around 200 people and markets energy to commercial and industrial customers in 16 states.

The deal is expected to close in the fourth quarter, and will require regulatory approvals from the Federal Energy Regulatory Commission and under the Hart-Scott-Rodino Act.

San Diego-based Sempra Energy said the deal represents the beginning of the second phase of the joint venture's asset sales. In July, Sempra Energy and RBS completed the first phase of asset sales with a transaction to sell to JP Morgan Chase & Co. the joint venture's global metals and oil businesses as well as the European natural gas and power businesses for around $1.6 billion.

Sempra also noted today it is in advanced negotiations with RBS for the sale of the last remaining assets of the joint venture, the North American wholesale power and natural gas business, based in Connecticut.

Sempra's chairman and chief executive Donald Felsinger said, "With this sale of Sempra Energy Solutions and advanced negotiations underway for the remaining North American operations of RBS Sempra Commodities, we are on track with our plan to exit the commodities business."

Sempra Energy Solutions is the U.S. retail commodity marketing arm of RBS Sempra Commodities. The firm, which has around 200 employees, markets energy to commercial and industrial customers in 16 states.

Sempra Energy expects its share of the proceeds from the sale of all of the joint venture's businesses and related cash distributions to total $1.8 billion to $1.9 billion, net of expected transactional transition costs. The company said the distributions are not expected to fully recover the goodwill included in the carrying value of Sempra Energy's investment in the joint venture.

Accordingly, Sempra Energy expects to reduce its investment in RBS Sempra Commodities in the third quarter, resulting in an after-tax charge ranging from $50 million to $150 million.

"After more than a decade of consistent growth, we expect to exit the business with approximately $3.5 billion in cash on an initial investment of $260 million," Felsinger added.

SRE is currently trading at $53.22 per share, up $0.14 or 0.26%, on the NYSE.

NOBGF.PK closed Friday's regular trading at $1.34 per share.

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