Item 1.01 Entry into a Material Definitive Agreement.
As previously disclosed, on July 3, 2020, Dominion Energy, Inc. (Dominion
Energy) and Dominion Energy Questar Corporation (Dominion Energy Questar)
entered into a Purchase and Sale Agreement (the Purchase Agreement) with
Berkshire Hathaway Energy Company (BHE) providing for Dominion Energy to sell
substantially all of its Gas Transmission & Storage operating segment assets to
BHE (the Transaction). On October 5, 2020, since approval of the Transaction
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(HSR), was not obtained within 75 days following the date of the Purchase
Agreement, Dominion Energy and Dominion Energy Questar, under the terms of the
Purchase Agreement, delivered notice to BHE of their election to terminate the
Transaction with respect to Dominion Energy Questar Pipeline, LLC and related
entities (the Questar Pipeline Group) and, in connection with the execution of
the Q-Pipe Purchase Agreement referenced below, to waive the related termination
fee under the Purchase Agreement. Dominion Energy and Dominion Energy Questar
currently expect to close the Transaction exclusive of the Questar Pipeline
Group on November 2, 2020. Pursuant to the terms of the Purchase Agreement, the
purchase price will be approximately $2.7 billion in cash (subject to certain
adjustments) and the assumption of approximately $5.3 billion in debt.
Also on October 5, 2020, Dominion Energy Questar entered into a second Purchase
and Sale Agreement (the Q-Pipe Purchase Agreement) with BHE providing for
Dominion Energy Questar to sell the Questar Pipeline Group to BHE (the Q-Pipe
Transaction) after receipt of HSR approval, which is currently anticipated in
early 2021, for a purchase price of approximately $1.3 billion in cash (subject
to certain adjustments) (the Q-Pipe Cash Consideration) and the assumption of
approximately $430 million of existing long-term debt. Dominion Energy is also a
party to the Q-Pipe Purchase Agreement, as guarantor for certain provisions
regarding the Purchase Price Repayment Amount (defined below) and other matters.
Dominion Energy Questar and its affiliates may not solicit or accept offers from
alternative buyers for of all or a material portion of the Questar Pipeline
Group until after March 31, 2021. Without limitation, either party may terminate
the Q-Pipe Purchase Agreement if the closing has not occurred on or before
June 30, 2021 or if the original Purchase Agreement has been validly terminated
in accordance with its terms.
BHE has agreed to deliver the Q-Pipe Cash Consideration to Dominion Energy
Questar on November 2, 2020. If the Q-Pipe Transaction does not close, Dominion
Energy Questar has agreed to repay all or substantially all of the Q-Pipe Cash
Consideration (the Purchase Price Repayment Amount) to BHE on or prior to
December 31, 2021. If the HSR approval has not been obtained by June 30, 2021,
upon BHE's written request, Dominion Energy Questar will seek alternative buyers
for all or a material portion of the Questar Pipeline Group (an Alternative
Transaction). The Purchase Price Repayment Amount may be paid in cash (from the
proceeds of an Alternative Transaction or otherwise) or in shares of common
stock, no par value, of Dominion Energy, or a combination thereof; provided any
payment on or after December 15, 2021 must be paid in cash only.
The completion of the Q-Pipe Transaction is subject to other customary closing
conditions, including customary conditions regarding the accuracy of the
representations and warranties and compliance by the parties in all material
respects with their respective obligations under the Q-Pipe Purchase Agreement.
The Q-Pipe Transaction is not subject to a financing condition.
Pursuant to the Q-Pipe Purchase Agreement, employees transferred as part of the
Q-Pipe Transaction will have certain employment protections for generally 24
months following the closing date.
The Q-Pipe Purchase Agreement contains customary representations, warranties and
covenants related to the conduct of the business and the Q-Pipe Transaction.
Dominion Energy Questar and BHE each have agreed to indemnify the other party
for losses arising from certain breaches of representations, warranties and
covenants contained in the Q-Pipe Purchase Agreement and other liabilities,
subject to certain limitations.
The foregoing description of the Q-Pipe Purchase Agreement and the transactions
contemplated thereby is subject to, and qualified in its entirety by, the full
text of the Q-Pipe Purchase Agreement, a copy of which is attached hereto as
Exhibit 2.1 and is incorporated herein by reference.
The representations and warranties contained in the Q-Pipe Purchase Agreement
were made only for the purposes of the Q-Pipe Purchase Agreement as of the
specific dates therein and were solely for the benefit of the parties to the
Q-Pipe Purchase Agreement. The representations and warranties contained in the
Q-Pipe Purchase Agreement may be subject to limitations agreed upon by the
parties to the Q-Pipe Purchase Agreement and are qualified by information in
confidential
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disclosure schedules provided in connection with the signing of the Q-Pipe
Purchase Agreement. These confidential disclosure schedules contain information
that modifies, qualifies and creates exceptions to the representations and
warranties set forth in the Q-Pipe Purchase Agreement. Moreover, certain
representations and warranties in the Q-Pipe Purchase Agreement may be subject
to a standard of materiality provided for in the Q-Pipe Purchase Agreement and
have been used for the purpose of allocating risk among the parties, rather than
establishing matters of fact. Investors should not rely on the representations,
warranties and covenants or any descriptions thereof as characterizations of the
actual state of facts or condition of the parties or any of their respective
subsidiaries or affiliates. Moreover, information concerning the subject matter
of the representations and warranties may change after the date of the Q-Pipe
Purchase Agreement, which subsequent information may or may not be fully
reflected in Dominion Energy's or BHE's public disclosures.
FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements, with respect to certain
future plans concerning the Transaction and the Q-Pipe Transaction. Factors that
could cause actual results to differ include, but are not limited to: the
expected timing and likelihood of completion of the proposed transactions with
BHE; the risk that Dominion Energy or BHE may be unable to obtain necessary
regulatory approvals for the transactions or required regulatory approvals may
delay the transactions; the risk that conditions to the closing of the
transactions may not be satisfied; unusual weather conditions and their effect
on energy sales to customers and energy commodity prices; extreme weather events
and other natural disasters; extraordinary external events, such as the current
pandemic health event resulting from COVID-19; federal, state and local
legislative and regulatory developments; changes to federal, state and local
environmental laws and regulations, including proposed carbon regulations; cost
of environmental compliance; changes in enforcement practices of regulators
relating to environmental standards and litigation exposure for remedial
activities; capital market conditions, including the availability of credit and
the ability to obtain financing on reasonable terms; fluctuations in interest
rates; changes in rating agency requirements or credit ratings and their effect
on availability and cost of capital; impacts of acquisitions, divestitures,
transfers of assets by Dominion Energy to joint ventures, and retirements of
assets based on asset portfolio reviews; receipt of approvals for, and timing
of, closing dates for acquisitions and divestitures; changes in demand for
Dominion Energy's services; additional competition in Dominion Energy's
industries; changes to regulated rates collected by Dominion Energy; changes in
operating, maintenance and construction costs; timing and receipt of regulatory
approvals necessary for planned construction or expansion projects and
compliance with conditions associated with such regulatory approvals; adverse
outcomes in litigation matters or regulatory proceedings; and the inability to
complete planned construction projects within time frames initially anticipated.
Other risk factors are detailed from time to time in Dominion Energy's quarterly
reports on Form 10-Q and most recent annual report on Form 10-K filed with the
Securities and Exchange Commission.
Item 9.01 Financial Statements and Exhibits.
Exhibits
2.1 Purchase and Sale Agreement, dated as of October 5, 2020, by and
among Dominion Energy Questar Corporation, Berkshire Hathaway Energy
Company and Dominion Energy, Inc., as guarantor.*
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
* Filed herewith. Schedules and exhibits have been omitted pursuant to Item
601(b)(2) of Regulation S-K. Dominion Energy agrees to furnish supplementally
to the SEC a copy of any omitted schedule upon request by the SEC.
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