| Item 1.01 | Entry Into a Material Definitive Agreement |
Proposed Sale of 19.9% Equity Interest in Northern Indiana Public Service Company LLC
On June 17, 2023, NiSource Inc., a Delaware corporation (“NiSource”), along with its wholly-owned subsidiary, NIPSCO Holdings II LLC, a Delaware limited liability company (“Holdings II”), entered into a purchase and sale agreement (the “Purchase Agreement”) with BIP BLUE BUYER L.L.C., an affiliate of Blackstone Infrastructure Partners, an experienced investor in U.S. infrastructure (the “Investor”). Holdings II is (i) 100% owner of all issued and outstanding membership interests of Northern Indiana Public Service Company LLC, an Indiana limited liability company (“NIPSCO”) and (ii) 100% owned by NIPSCO Holdings I LLC, an Indiana limited liability company (“Holdings I”), which in turn is 100% owned by NiSource. Under the terms of the Purchase Agreement, Investor will acquire newly issued membership interests of Holdings II which will represent a 19.9% ownership in Holdings II at closing, for a purchase price of $2.150 billion in cash, subject to adjustment based on the timing of closing and the amount of capital contributions made prior to closing (the “Transaction”). At the closing of the Transaction, NiSource will own an 80.1% controlling interest in NIPSCO, while Investor will own the remaining 19.9% non-controlling interest. The parties currently expect for the Transaction to close by the end of 2023.
The closing of the Transaction is subject to the satisfaction of certain customary closing conditions described in the Purchase Agreement, including, receipt of authorization by the Federal Energy Regulatory Commission (“FERC”). Following closing, Investor will not have any indemnification rights with respect to any inaccuracy of representations and warranties made by NiSource and Holdings II, except in the case of fraud. Instead, Investor’s sole remedy, except in the case of fraud, for any inaccuracy of representations and warranties will be through a representation and warranty insurance policy to be purchased in connection with the Transaction.
The Purchase Agreement may be terminated: (i) by mutual written consent of the parties; (ii) by either party if the closing has not occurred on or before one year after the effective date of the Purchase Agreement; (iii) by Investor or NiSource, as the case may be, prior to the closing upon certain material breaches or failures to perform any of the representations, warranties, covenants or agreements by the other party; or (iv) by either party prior to the closing in the event of a final and non-appealable law or order restraining, enjoining or otherwise prohibiting the closing in any competent jurisdiction.
The Purchase Agreement contains customary representations and warranties by NiSource, Holdings II and Investor. The representations and warranties of each party set forth in the Purchase Agreement have been made solely for the benefit of the other parties to the Purchase Agreement, and such representations and warranties should not be relied on by any other person. In addition, such representations and warranties (a) have been qualified by disclosure schedules that the parties have delivered in connection with the execution of the Purchase Agreement, (b) are subject to the materiality standards set forth in the Purchase Agreement, which may differ from what may be viewed as material by investors, (c) in certain cases, were made as of a specific date, and (d) may have been used for purposes of allocating risk between the respective parties rather than establishing matters of fact. Accordingly, no person should rely on the representations and warranties as characterizations of the actual state of facts. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the execution of the Purchase Agreement.
Pursuant to the terms of the Purchase Agreement, at closing of the Transaction, Investor, Holdings I, Holdings II and NiSource will enter into an Amended and Restated Limited Liability Company Operating Agreement (the “LLC Agreement”). The LLC Agreement, among other things, provides for ongoing governance, exit rights, additional capital contributions, distributions, and other arrangements for Holdings II from and following the closing of the Transaction. As part of the Transaction, Blackstone is committed to funding its pro rata share of ongoing capital requirements, which is supported by a $250 million equity commitment letter. Upon the closing of the Transaction, the board of directors of Holdings II (the “Board”) will consist of seven directors. The LLC Agreement will allow the Investor to appoint at least two directors to the Board so long as Investor holds at least a 17.5% Percentage Interest (as defined in the LLC Agreement). The LLC Agreement also contains certain investor protections, including, among other things, requiring Investor approval for Holdings II to take certain major actions. In addition, the LLC Agreement will contain certain transfer restrictions and other transfer rights and obligations applicable to both Investor and NiSource.
The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Purchase Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
