Macquarie fund-led team acquires public utility Cleco Corporation

A group of North American long-term infrastructure investors led by Macquarie Infrastructure and Real Assets (MIRA) and British Columbia Investment Management Corporation (bcIMC), together with John Hancock Financial and other infrastructure investors, have agreed to acquire Cleco Corporation, a Louisiana-based public utility holding company and owner of regulated electric utility Cleco Power LLC.

The agreement values Cleco at approximately $4.7 billion, including approximately $1.3 billion of assumed debt.

The new owners announced they will refinance Cleco's existing bank debt at closing.

Under the terms of the agreement, the new owners will acquire all outstanding shares of Cleco Corporation for $55.37 per share in cash. The price represents approximately a 15 percent premium to Cleco's closing price of $48.27 on October 17, 2014, the last trading day prior to the announcement of the agreement.

The transaction is subject to customary closing conditions, including the approval of Cleco shareholders, the approval of the Louisiana Public Service Commission (LPSC) and the Federal Energy Regulatory Commission (FERC), and the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. The transaction is expected to close in the second half of 2015.

In addition, following the close of the transaction, Cleco will continue to operate as an independent company led by local management and will maintain its headquarters in Pineville, La. Cleco's chief executive officer, senior utility management, and leaders of corporate support functions will all be Louisiana residents as will at least four members of Cleco's board of directors, including its chair. Cleco and the new owners have made additional commitments to the LPSC including that no changes will be made to Cleco's operations, staffing levels (currently approximately 1,200 employees), compensation levels or employee and retiree benefits programs as a result of the transaction.

Bruce Williamson, Cleco's chairman, president and chief executive officer, said:

"With this agreement, Cleco's existing investors will receive an exceptional value for their shares to top off a superior total shareholder return of the past few years, and our customers and employees can expect us to retain our strong commitment to service and reliability. The board and management worked together in structuring this transaction to deliver a premium valuation to our public shareholders and ensure a continued local presence in the communities Cleco serves. This agreement is the right transaction for our shareholders, employees, retirees, and customers of all types. The new owners understand the value Cleco brings to the region and are committed to Cleco's strategy as a safe, reliable electricity provider positioned to meet Louisiana's long-term power needs."

Chris Leslie, chief executive officer of Macquarie Infrastructure Partners III (MIP III), the MIRA-managed fund leading the acquisition, said:

"A well-run utility like Cleco, operating in an environment in which our experience and expertise can help drive additional growth, represents a very good opportunity for our investors," said . "Our ownership group has significant experience with large utilities in the United States and around the world. We value having quality local management, and we support these independent businesses in their efforts to grow and prosper over the long-term."

Lincoln Webb, senior vice president, Infrastructure for bcIMC, said:

"Cleco is an attractive infrastructure business operating in a stable, regulated environment. We are delighted to invest in Cleco - a strong and respected company based and doing business in the State of Louisiana. Cleco complements our existing infrastructure portfolio and is considered a long-term investment for bcIMC and our pension plan and insurance fund clients."

Recep Kendircioglu, managing director, Power & Project Finance Team for John Hancock Life Insurance Company, said:

"Utility investing is a core part of our investment strategy. We serve as a strategic funding partner for utility and infrastructure build-out throughout North America, and we are very pleased to be a part of this investor group."

Upon closing, Darren Olagues, currently president of Cleco's utility operating company, Cleco Power LLC, is expected to become president and chief executive officer of Cleco. Olagues has worked with Cleco for more than seven years and has over 20 years of utility industry experience. He was chief financial officer of Cleco Corporation and senior vice president of Cleco Midstream Resources prior to assuming his current position in 2013. A Louisiana native, Olagues will continue to be based out of the company's headquarters in Pineville.

Goldman Sachs & Co. and Tudor, Pickering, Holt & Co. are serving as financial advisors to Cleco, and Locke Lord LLP is the company's legal advisor. Hunton & Williams LLP is serving as legal counsel to the independent members of the Cleco board of directors.

Macquarie Capital (USA) Inc. is serving as financial advisor to the MIRA and bcIMC-led investor group. Kirkland & Ellis LLP is serving as its legal counsel. Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel to bcIMC.