Crius Energy Trust completes acquisition of U.S. Gas & Electric, Inc. and subscription receipt offering

On July 5, 2017, Crius Energy Trust (Crius or the Trust) (TSX:KWH.UN) announced the completion of the acquisition of U.S. Gas & Electric, Inc., a leading US energy retailer with natural gas and/or electricity customers in 11 States and D.C. (the Acquisition), for total consideration of US$152.5 million plus US$20 million in working capital, for a total purchase price of approximately US$172.5 million. 

As a result of the Acquisition, Crius has added a diverse portfolio of electricity and natural gas customers, totaling approximately 375,000 residential customer equivalents (RCEs) in Connecticut, Illinois, Indiana, Kentucky, Maryland, Massachusetts, Michigan, New Jersey, New York, Ohio, Pennsylvania and the District of Columbia. Crius now serves nearly 1.4 million RCEs, representing an approximate 37 per cent increase to the existing customer portfolio, and is now positioned among the 10 largest independent energy retailers in North America. 

On May 30, 2017, concurrently with the announcement of the Acquisition, Crius entered into an agreement with a syndicate of underwriters co-led by Desjardins Capital Markets, RBC Capital Markets and National Bank Financial Inc., and including Canaccord Genuity Corp., Scotia Capital Inc., CIBC World Markets Inc., Cormack Securities Inc. and Raymond James Ltd. (collectively, the Underwriters), pursuant to which the Underwriters agreed to purchase from Crius, on a “bought deal” basis, and sell to the public 11,224,500 subscription receipts of the Trust (Subscription Receipts) at a price of $9.80 per Subscription Receipt (the Offering Price) for total gross proceeds of $110 million (the Offering). In addition, the Trust also granted the Underwriters an option (the Over-Allotment Option) to purchase up to an additional 1,683,675 Subscription Receipts (the Additional Subscription Receipts) at the Offering Price per Additional Subscription Receipt, exercisable in whole or in part, at any time up to 30 days following the closing of the Offering. 

On June 20, 2017, the Trust announced the closing of the base offering of 11,224,500 Subscription Receipts at the Offering Price for aggregate gross proceeds of approximately $110 million. On June 27, 2017, the Trust announced the closing in full of the Over-Allotment Option, pursuant to which 1,683,675 Additional Subscription Receipts were issued at the Offering Price for additional aggregate gross proceeds of approximately $16.5 million. 

In connection with the closing of the Acquisition, the Subscription Receipts issued, including the Additional Subscription Receipts, converted on a one-for-one basis, into 12,908,175 units of the Trust following the satisfaction of the escrow release conditions relating to the closing of the Acquisition. 

Bennett Jones LLP acted as Canadian counsel for Crius with a team that included Christian Gauthier, Andrew Disipio and Claire Lehan (corporate/securities), and Thomas Bauer and Andrew Sullivan (tax). Baker Botts, LLP acted as US counsel for Crius with a team that included Elaine Walsh, Don Lonczak, Mark Bodron, Samantha Crispin, Mollie Duckworth, Martin Toulouse, Greg Wagner, Mike Bodosky, Brendan Dignan, Stephanie Jeanne, Peter Farrell, Marcia Hook, Susan Toumanian, Kyle Henne, Whitney Blazek, Kasyn Stevenson and Justin Clune. 

Davis Wright Tremaine LLP acted as counsel for U.S. Gas & Electric. Locke Lord LLP acted as counsel for U.S. Gas & Electric with a team led by John Eisel, along with David Fischer and Mike Wilson, Chris Flanagan and Mike Conroy (tax), Joe Farside (HSR matters), Stan Keller, Brett Pritchard and Tom Bohac (securities), Lori Basilico (benefits) and Derrick Hibbard (corporate). Fasken Martineau DuMoulin LLP acted as Canadian counsel for U.S. Gas & Electric with a team that included Blair Horn, Barinder Sidhu and Martin Ferreira Pinho. 

The Underwriters were represented by Baker McKenzie with a team that included Kevin Rooney, Ora Wexler and Ben Keen (corporate/securities) and Peter Clark and Patricia McDonald (tax).