Sempra unit to purchase AEI stakes in South American utilities for approximately $875MM

Source: Sempra Energy

Sempra Energy (NYSE:SRE) announced that its subsidiary, Sempra Pipelines & Storage, will acquire, for approximately $875 million, AEI's stake in two South American utilities jointly owned with AEI.

Currently, Sempra Pipelines & Storage and AEI each own 50 percent of Chilquinta Energia S.A. in Chile and approximately 38 percent of Luz del Sur in Peru. Upon completion of this transaction, Sempra Pipelines & Storage will own 100 percent of Chilquinta Energia and approximately 76 percent of Luz del Sur, with the remaining shares of Luz del Sur held by institutional investors and the general public. 

Scheduled to close in the second quarter 2011, the transaction is expected to contribute additional earnings per share for Sempra Energy of approximately $0.15 in 2011 and $0.22 in 2012. These additional earnings are net of estimated financing costs and assume the use of excess funds from foreign operations and previously announced asset sales to fund this transaction. 

With this announcement, Sempra Energy has updated its 2011 earnings-per-share outlook to a range of $4.00 to $4.30. 

"We expect these additional investments in Chilquinta Energia and Luz del Sur to produce stable, long-term returns for our shareholders," said Donald E. Felsinger, chairman and chief executive officer of Sempra Energy. "We have been a co-owner of these utilities for 12 years. Both Chilquinta Energia and Luz del Sur have a successful track record of earnings growth and offer continuing opportunities to re-invest capital in expanding infrastructure." 

Chilquinta Energia is an electric distribution utility serving approximately 590,000 customers in the cities of Valparaiso and Vina del Mar in central Chile. 

Luz del Sur is an electric distribution utility that serves approximately 886,000 customers in the southern zone of metropolitan Lima, Peru, and delivers approximately one-third of all power used in the country. Luz del Sur is listed on the Lima Stock Exchange under the symbol "LUSURBC1." 

"Chilquinta Energia and Luz del Sur are based in high-growth areas of South America – in two countries with increasing levels of foreign investment, strong institutions and stable political and business environments," said George S. Liparidis, president and chief executive officer of Sempra Pipelines & Storage. 

As part of the transaction, Sempra Pipelines & Storage also has agreed to acquire AEI's interests in two energy-services companies, Tecnored S.A. and Tecsur S.A. 

The transaction is subject to AEI shareholder approval and other closing conditions, including obtaining regulatory approvals and resolution of certain tax matters.

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