Entergy Hopes to Sell Its Gas Distribution Business

NEW ORLEANS – On Oct. 30, Entergy announced a plan to sell its gas distribution business to Bernhard Capital Partners, a Baton Rouge-based private equity management firm, for roughly $484 million. 

The sale will have to be approved by the Louisiana Public Service Commission, the City of Baton Rouge, the East Baton Rouge Parish Metropolitan Council and the New Orleans City Council. 

According to the utility’s own estimates, Entergy Louisiana provides gas service to roughly 95,000 homes and businesses in the Baton Rouge area, and Entergy New Orleans serves about 109,000 homes and businesses in New Orleans.

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“We are pleased to partner with Bernhard Capital, who shares our values around employee engagement, safety and reliability performance, quality customer service and local community investment,” said Drew Marsh, chairman and chief executive officer for Entergy, in a press release. “This agreement allows us to continue our strategy of simplifying operations and focusing on our regulated electric utility business for the benefit of our customers.”

Bernhard Capital Partners invests in companies that provide services to government, infrastructure, industrial, utility and energy sectors. It also invests in utility assets.

Entergy said if the sale is approved, it will use the proceeds to repay debt and to support capital needs.

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“Our work is focused on strengthening businesses to, in turn, strengthen some of our country’s most critical infrastructure assets,” said Jeff Jenkins, founder and partner at Bernhard Capital Partners. “Under Entergy’s leadership, the natural gas distribution business has effectively served the two largest metropolitan areas in our state for decades. We believe this operation is primed to provide even greater services to Louisiana communities and beyond.”

RBC Capital Markets LLC is serving as financial advisor to Entergy and Skadden, Arps, Slate, Meagher & Flom LLP is serving as the company’s legal advisor. Jefferies LLC is serving as financial advisor to Bernhard Capital and Kirkland and Ellis LLP is serving as its legal advisor.

Entergy expects the sale to close in approximately 21 months, and Marsh said the utility is committed to a smooth transition.

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“Our gas utilities and dedicated gas employees have been and continue to be an integral part of Entergy, which is why it was imperative to approach this decision with thoughtful and deliberate consideration,” he said. “I want to thank our employees for their hard work and accomplishments.”

News of the sale comes at a time when gas-powered appliances are coming under scrutiny worldwide for their potential negative effects on the climate and health. In the U.S., several cities and states have banned gas stoves in new construction projects, but developers and other groups are fighting the changes in court.

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