Clarksburg, W.Va.-based Dominion Hope is West Virginia's second-largest gas provider and has about 115,000 residential and business customers in the state. Dominion Peoples has approximately 359,000 business and residential customers in Pennsylvania.
Together, the companies account for approximately 12 percent of Dominion's 4 million electric and natural gas utility customer accounts in the Mid-Atlantic and Midwest.
The agreement with Babcock & Brown is Dominion's second deal to sell the two gas utilities. In 2006, Dominion struck a deal to sell the pair to Pittsburgh-based Equitable Resources for $970 million. That agreement was terminated in January after regulators balked at approving the sale.
Dominion expects to net about $675 million after taxes from the new sales agreement with Babcock & Brown. Dominion said it will use the proceeds to reduce debt. Dominion listed $12.8 billion in long-term debt on its balance sheet at the end of March.
Because income from Dominion Peoples and Dominion Hope is excluded from the company's operating earnings, Dominion maintained its 2008 operating earnings guidance of $3.05 per share to $3.15 per share and its 2009 operating earnings outlook of $3.25 per share to $3.40 per share.
Analysts polled by Thomson Financial expect, on average, 2008 earnings per share of $3.11 and 2009 earnings per share of $3.34.
San Francisco-based Babcock & Brown Infrastructure Fund North America is an affiliate of Babcock & Brown, Australia's second-largest asset manager.
