Puget Sound Power & Light Co. (PSPL) and Washington Energy Co. (WE) have agreed to merge, projecting $370 million in savings over the next 10 years from elimination of duplicate corporate and administrative programs, and integration of field operations and facilities. About 45 percent of the savings would come from an 8-percent reduction in combined workforces. The new company plans to provide energy as a separate commodity, or bundled with the transportation or distribution service.
WE shares will be exchanged for .86 shares of PSPL stock; WE common stock is currently valued at about $488 million. Preferred shares of Washington Natural Gas Co., a WE subsidiary, will be converted into compatible shares of the merged company. After the merger is complete, all shareholders will receive annual dividends at the then-current rate for PSPL (now $1.84 per year).
Moody's Investors Service has placed the long-term credit ratings of PSPL under review for possible downgrade, and the credit ratings of WE under review for possible upgrade. Moody's said that although the combined utility would reduce expenses, its fixed charges will increase due to the debt and preferred stock assumed from the more heavily leveraged WE.