Stamford, Conn.-based Citizens, the parent company of Kauai Electric, today signed a definitive agreement with BHP Hawaii to purchase all of the outstanding stock in the local gas distribution company, which has 70,000 customers statewide and 310 employees.
The sale, which is subject to approval from the state Public Utilities Commission and the Federal Trade Commission, is expected to be completed in mid-1997.
"We are extremely pleased to enter into this transaction with a company that has a history of providing quality opportunities for its employees and excellent service to its customers," said Henry Neal, president of BHP Hawaii.
Both companies said the deal will not have an impact on local gas or electric rates.
Gasco recently received approval from the PUC for a rate increase. Citizens said it will continue to invest capital in Gasco to remain competitive.
Citizens said it is reviewing personnel decisions at Gasco but said it would honor the existing contract with the company's union. About 230 of Gasco's 310 employees are represented by the local Teamsters. "It is good news for both Gasco employees and the entire community when a new owner takes over with the intent of expanding and building up the company and its business," said Mel Kahele, local Teamsters president.
Gasco was founded in 1904 as the Honolulu Gas Co.
BHP Hawaii is owned by Australian-based giant Broken Hill Proprietary Inc., which put Gasco up for sale in July as part of a worldwide strategic asset review.
Broken Hill acquired the gas company in 1989 as part of its $400 million purchase of Pacific Resources Inc. BHP Hawaii said the sale of Gasco will allow it to focus on its core businesses here, which includes 95,000 barrel per-day petroleum refinery at Campbell Industrial Park and its BHP Gas Express gasoline retail chain.
Citizens, founded in 1935, is a diversified public utility company that provides electric, telecommunications, gas, water and wastewater services to 1.8 million customers in 20 states. The company, which had $1 billion in annual revenues in 1995, has owned Kauai Electric since 1969 when it purchased the utility from McBryde Sugar Co.
Citizens said the deal reinforces its efforts to focus in core markets where it has a strong presence.
The deal was lauded by Gov. Ben Cayetano, who said he was encouraged by the company commitment to offer gas and utility services for isle residents.
"Citizen Utilities' multimillion-dollar investment demonstrates continued confidence in Hawaii's economy," said Cayetano, in a statement released by BHP.
The sale will be closely watched by state Consumer Advocate Chuck Totto, who wants to ensure that the buyer will be able to retain Gasco's existing business and grow it.
Totto noted that Gasco during the past few years has lost some business clients to Hawaiian Electric Co., which he said could have a ripple effect on gas rates to local residents.