Cleco boosts customer perks again in Louisiana merger bid

Dive Brief:

Cleco Corp. and a group of investors led by Macquarie Infrastructure and Real Assets (MIRA) have offered to almost double customer bill credits in an effort to convince the Louisiana Public Service Commission of their plan to take the utility private, SNL Energy reports.
If approved, the companies say customers of Cleco Power LLC wold see rate credits increased from $65 million to $125 million, and total customer savings of over $143 million.
The proposals were made following hearings that began last year to consider the acquisition; company officials say the new package "clearly shows the level of commitment" to completing the deal.

Dive Insight:

Cleco and a band of investors are trying to convince Louisiana regulators that a proposed acquisition to take the company private is a good deal for consumers, and have significantly upped the ante following a round of hearings.

The companies have offered to increase customer rate credits to $125 million over 15 years, relative to what staff of the PSC proposed in July. And customers will receive an estimated $1.2 million per year in cost-of-service savings from the transaction, which the investor group believes will bring total customer savings to approximately $143 million in the next decade and a half.

"This latest filing clearly shows the level of commitment the investor group is willing to make to see this transaction close," Darren Olagues, president of Cleco Power, said in a statement. "Our customers, our employees, our retirees and our communities will benefit from the transaction."

The acquisition group includes MIRA, British Columbia Investment Management Corporation, John Hancock Financial and other infrastructure investors.

"These broader commitments provide substantial benefits to Cleco stakeholders and most importantly, ensure that Cleco Power will continue to provide great service to customers, communities and the region," said Andrew Chapman, senior managing director of Macquarie Infrastructure Partners. "We value the utility's dedicated workforce, quality local management and contributions to the communities it serves, which these commitments reflect."

The utility and investor group filed an application for the deal in February 2015, and since then, have made more than six dozen commitments to regulators, including service quality, protected jobs, and salaries. Also included in the commitments are assurances that Cleco's headquarters will remain in its current location, and the company will be led by local management. The investors have agreed to maintain four board members who are Louisiana residents.

The deal offers shareholders more than $55/share for their stock, a 15 percent premium to Cleco's closing price in October 20014, the last trading day before the deal was announced.