| Item 1.01. | Entry into a Material Definitive Agreement |
As previously disclosed, on July 3, 2020, Berkshire Hathaway Energy Company (“BHE”) entered into a Purchase and Sale Agreement (the “Purchase Agreement”) with Dominion Energy, Inc. (“DEI”) and Dominion Energy Questar Corporation (“Dominion Questar”) providing for BHE’s purchase of substantially all of DEI’s gas transmission & storage operating segment assets (the “Transaction”). On October 5, 2020, DEI and Dominion Questar, as permitted 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. BHE currently expects to close the Transaction exclusive of the Questar Pipeline Group on or about November 2, 2020. Pursuant to the terms of the Purchase Agreement, the purchase price for such amended Transaction 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, BHE entered into a second Purchase and Sale Agreement (the “Q-Pipe Purchase Agreement”) with Dominion Questar providing for BHE’s purchase of the Questar Pipeline Group from Dominion Questar (the “Q-Pipe Transaction”) after receipt of approval under the Hart-Scott-Rodino Improvements Act of 1976, as amended (“HSR Approval”), which is currently anticipated in early 2021, for a purchase price of approximately $1.3 billion in cash (the “Q-Pipe Cash Consideration”), subject to certain post-closing adjustments, and the assumption of approximately $430 million of existing long-term debt. DEI is also a party to the Q-Pipe Purchase Agreement, as guarantor for certain provisions regarding the Purchase Price Repayment Amount (as defined below) and other matters.
Under the Q-Pipe Purchase Agreement, BHE has agreed to deliver the Q-Pipe Cash Consideration to Dominion Questar on November 2, 2020. If the Q-Pipe Transaction does not close, Dominion Questar has agreed to repay all or (depending on the repayment date) substantially all of the Q-Pipe Cash Consideration (the “Purchase Price Repayment Amount”) to BHE on or prior to December 31, 2021. If HSR Approval has not been obtained by June 30, 2021, upon BHE’s written request, Dominion 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 or in shares of common stock, no par value, of DEI, or a combination thereof, subject to certain limitations as to stock repayments set forth in the Q-Pipe Purchase Agreement; 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.
The Q-Pipe Purchase Agreement contains customary representations, warranties and covenants related to the conduct of the business and the Q-Pipe Transaction. BHE and Dominion Questar 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 does not purport to be complete and is qualified in its entirety by reference to the full text of the Q-Pipe Purchase Agreement, a copy of which is filed as Exhibit 2.1 to this Current Report on Form 8-K and incorporated herein by reference. The Q-Pipe Purchase Agreement has been included to provide information regarding its terms. It is not intended to provide any other factual information about BHE, DEI, Dominion Questar or any of their respective subsidiaries or affiliates. The representations, warranties and covenants contained in the Q-Pipe Purchase Agreement (i) were made by the parties thereto only for purposes of that agreement and as of specific dates; (ii) were made solely for the benefit of the parties to the Q-Pipe Purchase Agreement; (iii) may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures exchanged between the parties in connection with the execution of the Q-Pipe Purchase Agreement (such disclosures include information that has been included in public disclosures, as well as additional non-public information); and (iv) may have been made for the purposes of allocating contractual risk between the parties to the Q-Pipe Purchase Agreement instead of establishing these matters as facts. Additionally, the representations, warranties, covenants, conditions and other terms of the Q-Pipe Purchase Agreement may be subject to subsequent waiver or modification, and information concerning the subject matter of the representations, warranties and covenants may change after the date of the Q-Pipe Purchase Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures. The Q-Pipe Purchase Agreement should not be read alone, but should instead be read in conjunction with the other information regarding the Company that is or will be contained in, or incorporated by reference into, the Company’s Forms 10-K, Forms 10-Q and other documents that are filed with the United States Securities and Exchange Commission (“SEC”).
2
