| Item 1.01. | Entry into a Material Definitive Agreement. |
On October 5, 2021, Southwest Gas Holdings, Inc. (the “Company”) and Dominion Energy Questar Corporation (the “Seller”), a wholly owned subsidiary of Dominion Energy, Inc., entered into a Purchase and Sale Agreement (the “Purchase Agreement”) pursuant to which the Seller will sell all of the equity interests in Dominion Energy Questar Pipeline, LLC and related entities (the “Questar Pipeline Group”) to the Company (collectively, the “Transaction”). The Company and the Seller currently expect to close the Transaction by December 31, 2021. Pursuant to the Purchase Agreement, the purchase price will be $1.545 billion in cash (subject to certain adjustments) (the “Transaction Consideration”), and the Company will assume approximately $430 million of existing long-term debt as a result of the Transaction.
The Purchase Agreement contains certain termination rights, including a mutual termination right exercisable at any time and a unilateral termination right excisable by either party if certain conditions have not been met by December 31, 2021 (the “Initial Termination Date”), subject to an extension unilaterally exercisable by either party if certain conditions have not been met, subsequently extending the Initial Termination Date through June 30, 2022.
The Company has furnished the Seller with executed debt financing commitments with respect to a new term loan that will provide the funds for the Transaction Consideration. The Transaction is not subject to a financing condition. The Purchase Agreement contains customary requirements for the Seller to cooperate with the Company in obtaining the financing contemplated by the debt commitments.
The completion of the Transaction is subject to customary closing conditions, including the expiration or termination of any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, approval of certain aspects of the Transaction by the Federal Communications Commission, and 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 Purchase Agreement.
Pursuant to the Purchase Agreement, employees transferred as part of the Transaction will have certain employment protections for generally 24 months following the closing date. In addition, under the terms of the Purchase Agreement, upon the closing of the Transaction, the Company and the Seller will enter into a transition services agreement pursuant to which the Seller will continue to provide certain services with respect to the Questar Pipeline Group for a specified period of time following the closing of the Transaction.
The Purchase Agreement contains customary representations, warranties and covenants related to the conduct of the business and Transaction. The Company and the Seller each have agreed to indemnify the other party for losses arising from certain breaches of representations, warranties and covenants contained in the Purchase Agreement and other liabilities, subject to certain limitations. In connection with the Transaction, the Company intends to purchase a buy-side representations and warranties insurance policy to insure against potential breaches of representations in the Purchase Agreement.
The foregoing description of the Purchase Agreement and the transactions contemplated thereby is subject to, and qualified in its entirety by, the full text of the 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 Purchase Agreement were made only for the purposes of the Purchase Agreement as of the specific dates therein and were solely for the benefit of the parties to the Purchase Agreement. The representations and warranties contained in the Purchase Agreement may be subject to limitations agreed upon by the parties to the Purchase Agreement and are qualified by information in confidential disclosure schedules provided in connection with the signing of the Purchase Agreement. These confidential disclosure schedules contain information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the Purchase Agreement. Moreover, certain representations and warranties in the Purchase Agreement may be subject to a standard of materiality provided for in the 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 Purchase Agreement, which subsequent information may or may not be fully reflected in the Company’s or the Seller’s public disclosures.
