Emera’s Scott Balfour is Atlantic Business Magazine’s 2021 CEO of the Year
Posted on July 01, 2021 | By Alec Bruce | 0 Comments
Scott Balfour thinks teamwork is next to godliness, uses words like “triangulated momentum” and doubles the size of multi-billion-dollar companies. And that’s just before breakfast. Meet Emera Inc.’s main man and Atlantic Business Magazine’s 2021 CEO of the Year
IT WAS LABOUR DAY WEEKEND, 2015, and the mercury showed a scorching 29 degrees Celsius in downtown Halifax. For Emera Inc.’s future CEO Scott Balfour, who waited for word on his proposal to vault the Nova Scotia-based company into the stratosphere of North American energy utilities, the heat was also rising. Only, it had nothing to do with climate change.
For months, the then-CFO and his team had been toiling over a negotiation that would see Emera buy Tampa-based TECO Energy Inc.—a move that, if successful, would double its assets to $20 billion and customer base to 2.4 million. The TECO purchase, expected to be one of the biggest cross-border takeovers in Canadian history, would also give Emera the scale it needed to become a “distributed energy” giant, enabling it to proffer a mix of next-generation renewables across Nova Scotia, the Caribbean, and the U.S. Eastern Seaboard.
Now, it all came down to these three September days, and as Balfour hoped for good news about the last piece of the financing puzzle that would put them over the top, the markets boiled with bad tidings. Thanks to a bursting bubble of speculation, the Shanghai Stock Exchange had just lost a third of its A-share value. The consequent rolling “flash crashes” had halted trading in New York, where merger and acquisitions money for deals just like this were typically sought. For Emera, through no fault of its own, the dream seemed to be going suddenly, horribly sideways.
“Man, oh man, where is this heading?” Henry Demone, one of Emera’s longtime independent directors who had a front-row seat to the historic power play, recalls thinking. “We had to raise $2.1 billion in equity. That’s ‘2’ with a ‘b’! The banks said, ‘Sure, we’ll lend you the money, but you gotta raise the equity first.’ Under those market conditions, over Labour Day? Really? No retail investors were making commitments.”
Still, there was something about the calm and purposeful way Balfour’s team had gone about its business during the long, hot summer leading up to those last, few hours. There was something about Balfour, himself. Something unaccountably, almost absurdly, cool.
“Right off the top, Scott and the team knew we needed a deal that took advantage of Emera not having to worry about [American] anti-trust rulings,” Demone said. “So, there was some very clever structuring of the purchase and sale agreement to make our bid look more attractive to shareholders and, therefore, less risky for TECO to accept. [Then], when we finally needed to raise the $2.1 billion, we structured it as a debenture with a mandatory conversion, so the banks knew that one day it would be actual stock. Meanwhile, investors got an attractive interest rate until it converted to equity.”
One by one, Balfour’s ducks lined up and by September 7, Emera had its “cash” commitment, the banks were on board and press releases went out the doors from Tampa to Halifax. “Under the terms of the all-cash deal, which has been unanimously approved by the Board of Directors of both companies, TECO Energy shareholders will receive US $27.55 per common share, a 48 per cent premium based on TECO Energy’s unaffected closing stock price on July 15, 2015, and 25 per cent above TECO Energy’s unaffected 52-week high,” the joint announcement stated.
“This represents an aggregate purchase price of approximately US $10.4 billion including assumption of approximately US $3.9 billion of debt… Following the completion of the transaction, 56 per cent of Emera’s total assets will [be] in Florida, 23 per cent in Canada, 10 per cent in New England, six per cent in New Mexico, and five per cent in the Caribbean.”
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