KeySpan/National Grid: Settlement Agreement May Be Imminent

Includes: KSE, NGG
by: The M & A Researcher

The New Hampshire PUC has generated its May 2007 hearing docket to include the KeySpan (KSE) - National Grid (NYSE:NGG) merger case on May 29-31. These were the originally scheduled dates for this transaction's hearings, so it does not appear that there will be any postponements at this time. The PUC has also not made any recent revisions to the post-hearing procedural schedule, which concludes in July 2007.

The PUC is currently expected to issue its decision at some point in August 2007.

As anticipated, the New York PSC did revise its procedural schedule yesterday (4/16), to allow additional time for ongoing negotiations. The PSC states the following regarding the negotiation process:

Negotiations are currently scheduled to continue for four days in the week ending April 20, 2007. The negotiations might result in an agreement in principle on or before April 20. The parties might also agree to seek additional time to negotiate beyond April 20. Another possibility is that these cases will revert to a litigation track after April 20, 2007, with evidentiary hearings starting in New York City on Monday, April 30, 2007. We do not know for certain which of these outcomes will occur. However, all parties need to know what the procedures will be if the cases revert to a litigation track.

The remaining procedural schedule has been revised as follows:


Naturally, this schedule could easily be changed again if indeed the negotiations stall and the "litigation track" goes into effect.

However, the general impression at this point is that the protracted negotiations are a positive development in that an impasse would very likely have been leaked at this stage. It is therefore believed that the brief negotiation extension is an indication that a settlement agreement between the companies, PSC staff, and intervenors is imminent. If this is the case, an announcement detailing the agreement could be issued early next week.

The September 19 PSC "Target Date" must be considered tentative, given the magnitude and complexity of this merger. In cases of this nature, it is never surprising to see the regulator postpone the hearing/decision target a month or two in order to ensure all information/evidence has been obtained and properly applied. In short, an October or November PSC decision is not entirely out of the question for this deal.

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