0001140361-19-010026.txt : 20190530 0001140361-19-010026.hdr.sgml : 20190530 20190530083017 ACCESSION NUMBER: 0001140361-19-010026 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20190524 ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20190530 DATE AS OF CHANGE: 20190530 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTH JERSEY INDUSTRIES INC CENTRAL INDEX KEY: 0000091928 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS DISTRIBUTION [4924] IRS NUMBER: 221901645 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06364 FILM NUMBER: 19864659 BUSINESS ADDRESS: STREET 1: 1 SOUTH JERSEY PLAZA STREET 2: ROUTE 54 CITY: FOLSOM STATE: NJ ZIP: 08037 BUSINESS PHONE: 609-561-9000 MAIL ADDRESS: STREET 1: 1 SOUTH JERSEY PLAZA STREET 2: ROUTE 54 CITY: FOLSOM STATE: NJ ZIP: 08037 FORMER COMPANY: FORMER CONFORMED NAME: SOUTH JERSEY GAS CO DATE OF NAME CHANGE: 19700507 FORMER COMPANY: FORMER CONFORMED NAME: ATLANTIC CITY GAS CO DATE OF NAME CHANGE: 19680301 8-K 1 form8k.htm 8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549



FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934



Date of Report (Date of earliest event reported):    May 24, 2019

SOUTH JERSEY INDUSTRIES, INC.
(Exact name of registrant as specified in Charter)

New Jersey
1-6364
22-1901645
(State or other jurisdiction Of incorporation)
(Commission File Number)
(IRS Employer Identification No.)

1 South Jersey Plaza, Folsom, NJ
 
08037
(Address of principal executive offices)
 
(Zip Code)

(609) 561-9000

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common Stock
SJI
New York Stock Exchange (NYSE)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Item 2.01
Completion of Acquisition or Disposition of Assets

As previously announced, on June 27, 2018, South Jersey Industries, Inc., a New Jersey corporation (the “Company”), through its indirectly wholly-owned subsidiary, Marina Energy LLC, a New Jersey limited liability company (“Marina”), entered into a series of agreements whereby Marina will sell its portfolio of solar energy assets (the “Transaction”) to an entity managed by Goldman Sachs Asset Management (“Buyer”) for total consideration of approximately $350 million in cash.

As previously disclosed, the Company has been transferring ownership of these assets through multiple closings, as conditions precedent are met. Effective May 24, 2019, the Company closed on the disposition of additional solar sites across Maryland, New Jersey and Massachusetts. Total net consideration received for the sale of these divestitures is approximately $8.2 million in cash. This is in addition to the assets that were previously disposed of as of February 28, 2019, as set forth in Item 2.01 of the Company Current Report on Form 8-K, filed with the United States Securities and Exchange Commission on March 6, 2019, and which is incorporated herein by reference.

To date, the Company has closed on a total of $312.4 million in cash related to the projects that have already closed.

The information provided in Exhibit 99.1 hereto is incorporated by reference into this Item 2.01.

Item 9.01
Financial Statements and Exhibits.

(b) Pro forma financial information.

The unaudited pro forma consolidated financial information of the Company giving effect to the above Transaction, and the related notes thereto, have been derived from its historical consolidated financial statements and are attached hereto as Exhibit 99.1.


(d) Exhibits

Exhibit No.
 
Description
99.1
 
Unaudited pro forma condensed consolidated financial statements and explanatory notes for the Company as of and for the three months ended March 31, 2019, and for the year ended December 31, 2018.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: May 30, 2019
SOUTH JERSEY INDUSTRIES, INC.
   
 
By:
/s/ Cielo Hernandez
   
Name: Cielo Hernandez
   
Title: Senior Vice President & Chief Financial Officer



EX-99.1 2 ex99_1.htm EXHIBIT 99.1

Exhibit 99.1

Unaudited Pro Forma Condensed Consolidated Financial Information

On June 27, 2018 (the “Effective Date”), South Jersey Industries, Inc. (“SJI” or the “Company”), a New Jersey corporation, through its indirectly wholly-owned subsidiary, Marina Energy LLC, a New Jersey limited liability company (“Marina”), entered into a series of agreements whereby Marina will sell its portfolio of solar energy assets (the “Transaction”) to an entity managed by Goldman Sachs Asset Management (the “Buyer”). As part of the Transaction, at the time, Marina agreed to sell the 76 distributed solar energy projects located at 143 sites across New Jersey, Maryland, Massachusetts and Vermont with total capacity of approximately 204 megawatts (the “Projects”). Total consideration for the Transaction was anticipated to be approximately $350.1 million in cash, which consisted of approximately $287.4 million for the sale of solar assets and approximately $62.7 million for the sale of certain Solar Renewable Energy Credits (“SRECs”).

To facilitate the Transaction, Marina and the Buyer entered into a Purchase Agreement, dated as of the Effective Date (the “Purchase Agreement”), pursuant to which Marina will sell the assets comprising the Projects or, in some cases, 100% of the equity interest of certain special purpose companies wholly-owned by Marina that own the assets comprising certain Projects, for an aggregate purchase price of approximately $287.4 million. The sale of individual projects has occurred on a rolling basis as conditions precedent to each closing, including certain regulatory filings and receipt of consents to assignment of project contracts and permits, are satisfied. The Purchase Agreement contained customary representations, warranties, covenants, and conditions precedent to closing of the sales. On February 27, 2019, a Fifth Amendment to the Purchase Agreement (“Amendment”) was entered into with the Buyer for the sites that remained unsold as of December 31, 2018.

On October 12, 2018, SJI and the Buyer completed the first divestiture of certain Projects for which the required consents and permits were satisfied (the “First Tranche”). The First Tranche consisted of 50 sites across New Jersey, Massachusetts, and Vermont with total capacity of 31.4 megawatts. Total consideration (excluding transaction costs) associated with the First Tranche is approximately $66.8 million in cash. Of this total, $8.9 million was received in July 2018 related to the sale of certain SRECs. The First Tranche did not constitute a significant disposition for purposes of Item 2.01 of Form 8-K.

On October 31, 2018, SJI and the Buyer completed the second divestiture of certain Projects for which the required consents and permits were satisfied (the “Second Tranche”). The Second Tranche consisted of 15 sites across New Jersey and Vermont with total capacity of 34.9 megawatts. Total consideration (excluding transaction costs) in aggregate associated with the Second Tranche is approximately $68.1 million in cash. Of this total, $8.3 million was received in July 2018 related to the sales of certain SRECs. The Second Tranche did not constitute a significant disposition for purposes of Item 2.01 of Form 8-K.

On November 30, 2018, SJI and the Buyer completed the third divestiture of certain Projects for which the required consents and permits were satisfied (the “Third Tranche”). The Third Tranche consisted of 16 sites across Maryland, New Jersey, and Vermont with total capacity of 58.1 megawatts. Total consideration (excluding transaction costs) in aggregate associated with the Third Tranche is approximately $61.8 million in cash. Of this total, $16.9 million was received in July 2018 related to the sale of certain SRECs. In the aggregate, the First Tranche, Second Tranche, and Third Tranche constituted a significant disposition for purposes of Item 2.01 of Form 8-K.

On December 31, 2018, SJI and the Buyer completed the fourth divestiture of certain Projects for which the required consents and permits were satisfied (the “Fourth Tranche” and collectively with the First Tranche, Second Tranche, and Third Tranche, “Q4 2018 Tranches”). The Fourth Tranche consisted of 27 sites across Maryland, New Jersey, and Massachusetts with total capacity of 49.2 megawatts. Total consideration (excluding transaction costs) in aggregate associated with the Fourth Tranche is approximately $87.5 million in cash. Of this total, $22.0 million was received in July 2018 related to the sale of certain SRECs. In the aggregate, the First Tranche, Second Tranche, Third Tranche, and Fourth Tranche constituted a significant disposition for purposes of Item 2.01 of Form 8-K.

On February 28, 2019, under the Amendment, SJI and the Buyer completed the fifth divestiture of certain Projects for which the required consents and permits were satisfied (the “Fifth Tranche”). The Fifth Tranche consisted of 4 sites across New Jersey and Massachusetts. Total consideration (excluding transaction costs) in aggregate associated with the Fifth Tranche is approximately $20.1 million in cash. Of this total, $3.9 million was received in July 2018 related to the sale of certain SRECs. In the aggregate, the Q4 2018 Tranches and the Fifth Tranche continued constituted a significant disposition for purposes of Item 2.01 of Form 8-K.


On May 24, 2019 (retroactive to April 30, 2019), under the Amendment, SJI and the Buyer completed the sixth divestiture of certain Projects for which the required consents and permits were satisfied (the “Sixth Tranche” and collectively with the First Tranche, Second Tranche, Third Tranche, Fourth Tranche, and Fifth Tranche, “the Tranches”). The Sixth Tranche consisted of 6 sites across New Jersey and Massachusetts. Total consideration (excluding transaction costs) in aggregate associated with the Tranches is $312.4 million in cash. Approximately $8.2 million relates to the Sixth Tranche. Of this total, $1.7 million was received in July 2018 and $0.1 million was received in May 2019 related to the sale of certain SRECs. In the aggregate, the Tranches continued to constitute a significant disposition for purposes of Item 2.01 of Form 8-K.

Divestiture of the Assets Sold

Because the Tranches are considered a significant disposition for purposes of Item 2.01 of Form 8-K, the Company prepared the accompanying unaudited pro forma condensed consolidated financial statements in accordance with Article 11 of Regulation S-X. The Company determined that the Transaction does not qualify for discontinued operations accounting under financial statement presentation authoritative guidance.

The unaudited pro forma condensed consolidated balance sheet as of March 31, 2019, is based on the historical financial statements of the Company as of March 31, 2019, after giving effect to the Sixth Tranche as if it had occurred on March 31, 2019. The unaudited pro forma condensed consolidated statement of operations for the three months ended March 31, 2019 and the year ended December 31, 2018 are based on the historical financial statements of the Company for such periods after giving effect to the Tranches as if they had occurred on January 1, 2018. The pro forma adjustments are based on available information and certain assumptions that the Company believes are reasonable as of the date of this Current Report on Form 8-K. Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed consolidated financial statements.

The preparation of the unaudited pro forma condensed consolidated financial information is based on financial statements prepared in accordance with accounting principles generally accepted in the United States, or “GAAP” standards, which are subject to change and interpretation. These principles require the use of estimates that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ materially from those estimates.

The pro forma financial statements are presented for informational purposes only and do not purport to represent what the results of operations or financial condition would have been had the Tranches actually occurred on the dates indicated, nor do they purport to project the results of operations or financial condition of the company for any future period or as of any future date. In addition, the pro forma financial statements were based on and should be read in conjunction with:


the audited consolidated financial statements of the Company as of and for the year ended December 31, 2018 and the related notes, included in the Company’s Annual Report on Form 10-K filed with the SEC on February 28, 2019; and

the unaudited condensed consolidated financial statements of the Company as of and for the three months ended March 31, 2019 and the related notes, included in the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 8, 2019.


Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of March 31, 2019
(in thousands)

   
Historical
SJI
   
Pro Forma
Adjustments
     
Pro Forma
 
                     
Assets
                   
Property, Plant and Equipment:
                   
Utility Plant, at original cost
 
$
4,427,438
   
$
-
     
$
4,427,438
 
Accumulated Depreciation
   
(799,637
)
   
-
       
(799,637
)
Nonutility Property and Equipment, net
   
98,278
     
-
       
98,278
 
Property, Plant and Equipment — Net
   
3,726,079
     
-
       
3,726,079
 
                           
Investments:
                         
Total Investments
   
86,933
     
-
       
86,933
 
                           
Current Assets:
                         
Cash and Cash Equivalents
   
10,360
     
-
       
10,360
 
Restricted Cash
   
-
     
-
       
-
 
Accounts Receivable, net
   
367,885
     
(78
)
(b)
   
367,807
 
Natural Gas in Storage, average cost
   
26,613
     
-
       
26,613
 
Materials and Supplies, average cost
   
1,744
     
-
       
1,744
 
Assets Held for Sale
   
37,532
     
(9,002
)
(a)
   
28,530
 
Other Prepayments and Current Assets
   
76,573
     
-
       
76,573
 
Total Current Assets
   
520,707
     
(9,080
)
     
511,627
 
                           
Regulatory and Other Noncurrent Assets:
                         
Regulatory Assets
   
624,187
     
-
       
624,187
 
Goodwill and Identifiable Intangible Assets
   
734,607
     
-
       
734,607
 
Other
   
170,849
     
-
       
170,849
 
Total Regulatory and Other Noncurrent Assets
   
1,529,643
     
-
       
1,529,643
 
Total Assets
 
$
5,863,362
   
$
(9,080
)
   
$
5,854,282
 
                           
Capitalization and Liabilities
                         
Equity:
                         
Common Stock
 
$
115,486
   
$
-
     
$
115,486
 
Premium on Common Stock
   
1,023,097
     
-
       
1,023,097
 
Treasury Stock (at par)
   
(275
)
   
-
       
(275
)
Accumulated Other Comprehensive Loss
   
(26,087
)
   
-
       
(26,087
)
Retained Earnings
   
402,333
     
(1,185
)
(d)
   
401,148
 
Total Equity
   
1,514,554
     
(1,185
)
     
1,513,369
 
Long—Term Debt
   
2,117,903
     
-
       
2,117,903
 
Total Capitalization
   
3,632,457
     
(1,185
)
     
3,631,272
 
                           
Current Liabilities:
                         
Notes Payable
   
355,121
     
-
       
355,121
 
Current Portion of Long—Term Debt
   
333,909
     
(7,380
)
(c)
   
326,529
 
Accounts Payable
   
332,876
     
(87
)
(b)
   
332,789
 
Other Current Liabilities
   
183,149
     
(428
)
(d)
   
182,721
 
Total Current Liabilities
   
1,205,055
     
(7,895
)
     
1,197,160
 
                           
Deferred Credits and Other Noncurrent Liabilities:
                         
Deferred Income Taxes – Net
   
111,614
     
-
       
111,614
 
Regulatory Liabilities
   
478,592
     
-
       
478,592
 
Other
   
435,644
     
-
       
435,644
 
Total Deferred Credits and Other Noncurrent Liabilities
   
1,025,850
     
-
       
1,025,850
 
Total Capitalization and Liabilities
 
$
5,863,362
   
$
(9,080
)
   
$
5,854,282
 


Unaudited Pro Forma Condensed Consolidated Statement of Income
For the Three Months Ended March 31, 2019
(in thousands, except per share amounts)

   
Historical
SJI
   
Pro Forma
Adjustments
     
Pro Forma
 
                     
Operating Revenues:
                   
Utility
 
$
414,346
   
$
-
     
$
414,346
 
Nonutility
   
222,952
     
(96
)
(e)
   
222,856
 
Total Operating Revenues
   
637,298
     
(96
)
     
637,202
 
Operating Expenses:
                         
Cost of Sales – (Excluding depreciation)
                         
— Utility
   
188,449
     
-
       
188,449
 
— Nonutility
   
213,938
     
-
       
213,938
 
Operations
   
62,826
     
(51
)
(f)
   
62,775
 
Impairment Charges
   
-
     
-
       
-
 
Maintenance
   
9,630
     
(54
)
(h)
   
9,576
 
Depreciation
   
23,685
     
-
       
23,685
 
Energy and Other Taxes
   
4,217
     
-
       
4,217
 
Net Gain on Sale of Assets
   
-
               
-
 
Total Operating Expenses
   
502,745
     
(105
)
     
502,640
 
Operating Income
   
134,553
     
9
       
134,562
 
                           
Other Income and Expense
   
2,575
     
-
       
2,575
 
Interest Charges
   
(28,653
)
   
2,104
 
(l)
   
(26,549
)
Income Before Income Taxes
   
108,475
     
2,113
       
110,588
 
Income Taxes
   
(24,949
)
   
(560
)
(m)
   
(25,509
)
Equity in Earnings of Affiliates
   
2,173
     
-
       
2,173
 
Income from Continuing Operations
 
$
85,699
   
$
1,553
     
$
87,252
 
                           
Basic Earnings Per Common Share:
                         
Continuing Operations
 
$
0.94
              
$
0.96
 
                           
Average Shares of Common Stock Outstanding – Basic
   
91,332
               
91,332
 
                           
Diluted Earnings Per Common Share:
                         
Continuing Operations
 
$
0.94
              
$
0.95
 
                           
Average Shares of Common Stock Outstanding – Diluted
   
91,432
               
91,432
 


Unaudited Pro Forma Condensed Consolidated Statement of Income
For the Year Ended December 31, 2018
(in thousands, except per share amounts)

   
Historical
SJI
   
Pro Forma
Adjustments
     
Pro Forma
 
                     
Operating Revenues:
                   
Utility
 
$
670,715
   
$
-
     
$
670,715
 
Nonutility
   
970,623
     
(36,850
)
(e)
   
933,773
 
Total Operating Revenues
   
1,641,338
     
(36,850
)
     
1,604,488
 
Operating Expenses:
                         
Cost of Sales – (Excluding depreciation)
                         
— Utility
   
258,781
     
-
       
258,781
 
— Nonutility
   
796,627
     
-
       
796,627
 
Operations
   
256,862
     
(11,164
)
(f)
   
245,698
 
Impairment Charges
   
105,280
     
(88,377
)
(g)
   
16,903
 
Maintenance
   
32,162
     
(2,119
)
(h)
   
30,043
 
Depreciation
   
96,723
     
(16,339
)
(i)
   
80,384
 
Energy and Other Taxes
   
9,537
     
(872
)
(j)
   
8,665
 
Net Gain on Sale of Assets
   
(15,379
)
             
(15,379
)
Total Operating Expenses
   
1,540,593
     
(118,871
)
     
1,421,722
 
Operating Income
   
100,745
     
82,021
       
182,766
 
                           
Other Income and Expense
   
2,404
     
(41
)
(k)
   
2,363
 
Interest Charges
   
(90,296
)
   
5,024
 
(l)
   
(85,272
)
Income Before Income Taxes
   
12,853
     
87,004
       
99,857
 
Income Taxes
   
(561
)
   
(19,525
)
(m)
   
(20,086
)
Equity in Earnings of Affiliates
   
5,611
     
-
       
5,611
 
Income from Continuing Operations
 
$
17,903
   
$
67,479
     
$
85,382
 
                           
Basic Earnings Per Common Share:
                         
Continuing Operations
 
$
0.21
              
$
1.02
 
                           
Average Shares of Common Stock Outstanding – Basic
   
83,693
               
83,693
 
                           
Diluted Earnings Per Common Share:
                         
Continuing Operations
 
$
0.21
              
$
1.01
 
                           
Average Shares of Common Stock Outstanding – Diluted
   
84,471
               
84,471
 


NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The unaudited pro forma condensed consolidated financial statements reflect the following adjustments:

Unaudited Pro Forma Condensed Consolidated Balance Sheet

“Historical SJI” – represents the historical condensed consolidated balance sheet of SJI as of March 31, 2019.


(a)
To eliminate the Company’s divestiture of solar assets related to the Sixth Tranche as of March 31, 2019, which was previously classified as held for sale.


(b)
Reflects adjustments for assets purchased or liabilities assumed by the Buyer. The Buyer purchased or assumed accounts receivable and accounts payable.


(c)
Reflects total net proceeds from the sale of assets included in the Sixth Tranche that were used to partially pay down the Company’s $475.0 million in aggregate principal amount of Floating Rate Senior Notes due 2019 on the one-year anniversary of the date of initial issuance, which at the Company’s option, bears interest at a variable base rate or a variable LIBOR (“Floating Rate Notes”).

(In thousands)
 
As of March 31, 2019
 
       
Purchase price of Projects included in the Sixth Tranche
 
$
6,374
 
Purchase price of SRECs included in the Sixth Tranche
   
1,788
 
Less: transaction costs
   
(782
)
Total net proceeds
 
$
7,380
 


(d)
To record the gain on sale of the Sixth Tranche, net of tax effect, as illustrated in the table below. As the gain is directly attributable to the Transaction and is not expected to have a continuing impact on the Company’s operations, the estimated gain is only reflected on the unaudited pro forma condensed consolidated balance sheet. The income tax associated with the estimated loss has been included within the Other Current Liabilities line item.

(In thousands)
 
As of March 31, 2019
 
       
Net proceeds from the Sixth Tranche
 
$
7,380
 
Less: cost basis of assets sold
   
(8,993
)
Loss on sale, before tax
   
(1,613
)
Plus: income tax benefit
   
428
 
Net loss on sale of assets of the Sixth Tranche
 
$
(1,185
)

Unaudited Pro Forma Condensed Consolidated Statements of Operations

“Historical SJI” – represents the historical condensed consolidated statements of operations of SJI for the three months ended March 31, 2019 and the year ended December 31, 2018.


(e)
To eliminate the historical revenues of the assets sold within the Tranches.

(f)
To eliminate the historical direct operations cost of the assets sold within the Tranches. No pro forma adjustment was made for historical indirect overhead costs that were allocated down to Marina.

(g)
To eliminate the historical impairment expense recorded for each of the assets sold within the Tranches.

(h)
To eliminate the historical direct maintenance expense of the assets sold within the Tranches. No pro forma adjustment was made for historical indirect maintenance expense that was allocated down to Marina.

(i)
To eliminate the historical depreciation expense recorded of the assets sold within the Tranches.



(j)
To eliminate the historical energy and other tax expense recorded for the assets sold within the Tranches. No pro forma adjustment was made for historical indirect energy and other tax expense that was allocated down to Marina.

(k)
To eliminate historical other income and expense recorded for the assets sold within the Tranches.

(l)
To reflect the reduction of interest expense as a result of the partial pay down of the Floating Rate Notes using the net proceeds from the Tranches.

(m)
To eliminate the historical income tax expense of the assets sold within the Tranches, as well as adjustments to record the income tax impacts of the pro forma adjustments using the blended statutory tax rates of 26.53% and 27.0% for the three months ended March 31, 2019 and the year ended December 31, 2018, respectively. These rates do not reflect SJI’s effective tax rates, which include other items and may be significantly different than the rates assumed for purposes of preparing these statements for a variety of reasons.