July 2, 2019 • EPE Related News
El Paso CEO to Depart Amid Take-private Deal
El Paso CEO to Depart Amid Take-private Deal
Power Finance & Risk
By Taryana Odayar
2 July 2019
El Paso Electric’s long-serving president and CEO Mary Kipp is leaving the company, which is in the midst of a take-private transaction, to take a leadership role at an electric utility in Washington State.
She will become president of Puget Sound Energy on Aug. 1, reporting initially to CEO Kimberly Harris. It is expected that Kipp will take over as CEO on Harris's retirement in January next year.
JP Morgan Investment Management recently signed a $4.3 billion deal to take El Paso Electric private (PFR, 6/3), concluding a hotly contested auction run by Lazard (PFR, 5/23).
The sale of the company, which serves 421,000 customers in a 20,000 square-mile area of the Rio Grande Valley in West Texas and Southern New Mexico, is expected to close in the first half of 2020.
“El Paso Electric’s commitments to our customers and our region, the place I have called home since I was a child, will continue after my departure,” Kipp said in a statement. “Realizing this is an important time for El Paso Electric, I have weighed the choice to depart very carefully as I considered, at length, the long-term plans for me and my family. My decision to move to Puget Sound Energy will allow my son to be closer to family which is very important to both of us.”
Replacing her as interim CEO is Adrian Rodriguez, who has been with El Paso for six years, serving as general counsel, senior vice president and assistant secretary. He was previously an attorney at Vinson & Elkins in Dallas office, specializing in energy regulations and commercial litigation.
Kipp is also a lawyer, having served as prosecuting attorney for the U.S. Federal Energy Regulatory Commission before joining El Paso Electric in 2007 as senior vice president, general counsel and chief commercial officer. She was appointed president in 2014 and CEO the following year.
Elaina Ball, the utility's chief administrative officer and senior vice president, has meanwhile been appointed interim chief operational officer. She joined last April from Austin Energy, where she was COO and deputy general manager.
Ratings downgrade
Moody's Investor Services has placed El Paso Electric on review for downgrade following the announcement of the proposed take-private by JP Morgan's Infrastructure Investments Fund.
A lack of available detail on the proposed long-term acquisition financing for the transaction creates uncertainty around the credit implications of the deal, according to the Moody’s report.
Bank of America Merrill Lynch advised JP Morgan on its bid and is providing a bridge loan (PFR, 6/3).
"With increasing, partly debt-funded capital expenditures and the ongoing pressure on cash flow from tax reform, we project a decline in El Paso Electric's credit metrics," said Nana Hamilton, a power and utilities analyst at Moody’s, in a statement.
A downgrade would affect about $1.2 billion debt, which is rated Baa1 at present.
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