MIRA-led group sweetens offer for Cleco

A team led by Macquarie and British Columbia has returned to the negotiating table offering Louisiana additional incentives to sell the public utility.

Having had its $4.7 billion offer for Cleco Power rejected by the Louisiana Public Service Commission (LPSC) last month , an investor group led by Macquarie Infrastructure & Real Assets  (MIRA) and the British Columbia Investment Management Corporation (bcIMC), has revised its offer in an effort to salvage a deal that has been in the making since October 2014.

“We heard the Commission's concerns, and we believe that we have addressed them,” Cleco and the investor group, which includes John Hancock Financial Services and other institutional investors, said in a statement on Monday. “Our goal has always been to make this transaction one that benefits our customers, employees, retirees and the communities Cleco serves.”

The revised offer includes about $100 million of immediate rate relief, which provides rate credits of $370 on average – based on consumption – to every Cleco residential and small business customer. This is a one-time rate credit that will be given to customers during a summer month.

In addition, the potential buyer has extended its commitment to maintain Cleco's employee headcount, salaries, benefits and retiree benefits from five to 10 years.

The group has also committed to back the state's economic development efforts by contributing $15 million to state economic development agencies that will administer the funds, allocating them to deserving projects in Cleco's service territories. The $15 million will be made available immediately post-closing, a person familiar with the deal told Infrastructure Investor.

Louisiana government pension funds will also have the opportunity to become part owners in the power utility company. The potential buyers will be reserving 10 percent of Cleco's equity, allowing pension funds to invest on the same terms and conditions this person said.

Since October 2014 , when the transaction was announced, the consortium has obtained approval from Cleco shareholders, clearance from the Committee on Foreign Investment in the US and consent from the Federal Energy Regulatory Commission (FERC).

Last month, the LPSC blocked the deal saying it was not in the public's interest, but without providing details concerning its rationale.

LPSC chairman Clyde Holloway was more explicit in a statement issued at the time. “I did not think that Cleco customers should serve as an ATM for a conglomeration of foreign companies, just so top Cleco executives could walk off with millions, leaving customers with long-term risk,” he said, without explaining the reasons for his strong-worded statement. Holloway stressed that since the deal concerns a monopoly, the utility's customers do not have a choice when it comes to purchasing their electricity.

The LPSC is scheduled to hear from the investor group and Cleco representatives on Wednesday during its business and executive session.