Monday, Integrys Energy Group, Inc. (TEG) announced that its subsidiary has closed the first transaction in the two-part sale of its wholesale natural gas marketing business to Sequent Energy Management L.P., reducing its collateral support requirements by $290 million.
The company's non-regulated subsidiary Integrys Energy Services, Inc., in the first half of the transaction sold substantially all of Energy Services' wholesale natural gas marketing business to Sequent Energy.
In the second half of the transaction, Integrys Energy Services will provide Sequent with fee-based services related to approximately 8 Bcf of the 11.5 Bcf total retained storage contracts till April 2011.
The remaining 3.5 Bcf of the 11.5 Bcf retained storage will be divested in the normal course of business and is expected to be completed in the first quarter 2010.
On completion of the provision of the fee-based services, Energy Services anticipates selling the remaining 8 Bcf of the storage contracts, reducing collateral support requirements by an additional $150 million.
The transaction has been approved by the Federal Energy Regulatory Commission and does not affect the retail natural gas and electric marketing business operated by Integrys Energy Services.
Integrys Energy expects to reduce its collateral support requirements by approximately $440 million when the two-part transaction is completed in early 2011.
The transactions are consistent with its goal to reduce capital investment and collateral support requirements for Integrys Energy Services, said the company.
In this transaction, J.P. Morgan Securities acted as exclusive financial advisor to Integrys Energy Group and Thorndike Landing acted as lead advisor to Integrys Energy Services.
TEG is currently trading at $41.33, up $0.29 or 0.71%, on the NYSE.
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