SECURITIES AND EXCHANGE COMMISSION
Washington, D.C 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: May 28, 1996
Colonial Gas Company
(Exact name of registrant as specified in its charter)
Massachusetts 0-10007 04-1558100
(State of (Commission File (IRS Employer
incorporation) Number) Identification No.)
40 Market Street, Lowell, Massachusetts 01853
(Address of principal executive offices and zip code)
(508) 458-3171
(Registrant's telephone number, including area code)
[END OF COVER PAGE]
Item 5. Other Events
On May 28, 1996, Colonial Gas Company ("Colonial") jointly
announced with Cabot LNG Corporation ("Cabot") the intention to
form a joint venture. The joint venture will be accomplished
through (i) Cabot acquiring from Colonial a fifty percent (50%)
interest in Transgas Inc., a trucking company specializing in
liquefied natural gas ("LNG") hauling that is presently a
wholly-owned Colonial subsidiary; and (ii) Cabot and Colonial
creating a new entity that will lease a Colonial LNG storage
tank and market LNG storage and related services to energy
providers and end-users. A May 28, 1996 Press Release, jointly
issued by Colonial and Cabot and further detailing the joint
venture, is included herewith as Exhibit 20 and is also
incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits:
(c) Exhibits:
Number and Description of Exhibit
20. May 28, 1996 Press Release entitled "Colonial Gas
Company and Cabot LNG Corporation Announce Joint
Venture, New Initiatives call for 50/50
Ownership of Transgas Inc., Joint LNG Storage
Venture."
SIGNATURES
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 hereunder duly authorized.
COLONIAL GAS COMPANY
Date: May 29, 1996 By: /s/ Nickolas Stavropoulos
Executive Vice President-
Finance, Marketing and
Chief Financial Officer
[EXHIBIT 20 TO COLONIAL GAS COMPANY FORM 8-K DATED MAY 28, 1996]
Contacts: Nickolas Stavropoulos Gordon Shearer, President
Executive Vice President- or
Finance, Marketing and Joseph Teves
Chief Financial Officer Executive Vice President
Colonial Gas Company Cabot LNG Corporation
(508) 458-3171 (617) 526-8300
FOR IMMEDIATE RELEASE:
May 28, 1996
Colonial Gas Company and Cabot LNG Corporation
Announce Joint Venture
New Initiatives Call for 50/50 Ownership
of Transgas Inc.,
Joint LNG Storage Venture
Lowell, MA (May 28, 1996)----In a major move
designed to capitalize on new opportunities in the
increasingly deregulated natural gas industry,
Colonial Gas Company and Cabot LNG Corporation
announced that they intend to form a joint venture
designed to enhance the overall value of liquefied
natural gas (LNG) as a competitive supplemental fuel
choice. Through this joint venture, the companies
will jointly own Transgas Inc. and a new entity that
together will provide LNG trucking, storage and
related services to the energy market in the
Northeast United States.
Cabot LNG to Buy a 50% Ownership
Share of Transgas
Cabot LNG Corporation, the largest importer of
liquefied natural gas in the United States, will
acquire for $7 million a 50% ownership interest in
Colonial's wholly-owned subsidiary, Transgas Inc.,
the nation's leading LNG trucking company. Colonial
Gas Company will recognize a gain of approximately
$0.40 per share at the time of the sale. The
proceeds from this transaction will provide Colonial
with additional financial flexibility necessary to
compete effectively in the deregulated energy
marketplace.
In addition to enhancing the financial position of
Colonial and its shareholders, the transaction also
provides clear benefits for both Transgas and its
customers. Transgas will continue to operate as an
independent business unit, headed by Victor Baur,
who will continue as President of Transgas.
New Joint Venture to Provide LNG
Storage and Related Services
Colonial and Cabot LNG will create a jointly-owned
new business entity that will market LNG storage and
related services to energy providers and end-users
throughout the region. The yet-to-be named entity
will lease for 20 years Colonial's one billion cubic
foot LNG storage tank and related facilities;
Colonial will continue to operate the facility.
While Colonial's operating and maintenance costs per
customer are already the lowest of all New England
gas companies, this lease agreement will enable the
company to further reduce its costs, augmenting its
aggressive efforts to defer a rate increase until
the next century. In addition to promoting stable
rates, the new joint venture agreement will allow
Colonial to continue to meet the supplemental fuel
requirements of its customers with the same degree
of reliability as in the past.
An Alliance Designed to Meet the Needs
of a Growing LNG Market
The extreme weather conditions of this past winter
presented the first real test of natural gas
resources since Federal deregulation of the
interstate natural gas pipeline delivery system in
1993. The extremely high demand for natural gas in
the Northeast during prolonged cold snaps
demonstrated the value of natural gas storage,
particularly "market area" storage of LNG.
Colonial's new alliance with Cabot LNG will create
an effective network of LNG services to assist
suppliers and end-users in satisfying their needs
for reliable and flexible market area storage.
Through this strategic initiative, Colonial and
Cabot LNG intend to offer expanded LNG services at a
time when deregulation is expected to saturate the
New England region with growing numbers of gas
supply competitors, all of whom will require
supplemental fuel capabilities. F. L. Putnam, III,
President and CEO of Colonial Gas Company, said,
"The combination of Cabot's LNG supply business with
Colonial's LNG trucking and storage services will
enhance the overall value of LNG as a competitive
supplemental fuel source, driving up demand in the
wake of deregulation and creating a high-growth
environment for both the new LNG storage entity and
Transgas."
Gordon Shearer, President of Cabot LNG Corporation,
said, "This new venture represents a further
commitment by Cabot LNG to develop the market for
LNG and related services in the region. With a
growing demand for natural gas on a flexible and
price competitive basis, Cabot LNG believes that LNG
is best positioned to meet these needs. This new
venture, along with our commitment to acquire
significant volumes of LNG from the Atlantic LNG
Project in Trinidad, and the proposed expansion of
our Everett LNG terminal underscores our commitment
to be a significant gas supplier to the region. It
also furthers our relationship with one of our
largest and oldest customers."
Colonial Gas Company (NASDAQ:CGES), a Massachusetts
corporation formed in 1849, is primarily a regulated
natural gas distribution utility. The Company
serves over 141,000 utility customers in 24
municipalities located northwest of Boston and on
Cape Cod. Through its subsidiary, Transgas Inc.,
the Company also provides over-the-road
transportation of liquefied natural gas, propane,
and other commodities.
Cabot LNG Corporation, established in 1989, is a
subsidiary of Boston-based Cabot Corporation
(NYSE:CBT). The Company imports liquefied natural
gas via the Everett, Mass., LNG import terminal
owned by its subsidiary, Distrigas of Massachusetts
Corporation, to meet the specialized needs of gas
and electric utilities, independent power producers
and industry. Cabot LNG holds a 10 percent interest
in the planned LNG export project being developed by
Atlantic LNG Company of Trinidad and Tobago at Point
Fortin, Trinidad, and holds purchase contracts for
60 percent of the plant's design capacity of
approximately 400 million cubic feet of LNG per day
which is targeted for Northeast markets.
[END OF EXHIBIT 20 TO COLONIAL GAS COMPANY FORM 8-K
DATED MAY 28, 1996]
