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