UNITED STATES
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 (Date of Earliest Event Reported):   February 12, 2016

Piedmont Natural Gas Company, Inc.
__________________________________________
(Exact name of registrant as specified in its charter)

     
North Carolina 1-6196 56-0556998
_____________________
(State or other jurisdiction 		_____________
(Commission 		______________
(I.R.S. Employer
of incorporation) File Number) Identification No.)
      
4720 Piedmont Row Drive, Charlotte, North Carolina   28210
_________________________________
(Address of principal executive offices) 		  ___________
(Zip Code)
     
Registrant’s telephone number, including area code:   704-364-3120

Not Applicable
______________________________________________
Former name or former address, if changed since last report

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Item 1.01 Entry into a Material Definitive Agreement.

As Piedmont Natural Gas Company, Inc. (Piedmont) has previously disclosed, Georgia Natural Gas Company (GNGC) exercised its option under the Second Amended and Restated Limited Liability Company Agreement of SouthStar Energy Services LLC (SouthStar) between Piedmont Energy Company, a wholly-owned subsidiary of Piedmont (PEC) and GNGC dated as of September 1, 2013 (LLC Agreement) to purchase PEC’s entire 15% interest in SouthStar for Market Value, subject to the consummation of the transactions contemplated under the Agreement and Plan of Merger among Piedmont, Duke Energy Corporation and Forest Subsidiary, Inc. dated as of October 24, 2015 (Merger Agreement).

On February 12, 2016, PEC and GNGC executed a letter agreement pursuant to which they agreed to be bound by the terms set forth in the accompanying term sheet concerning GNGC's proposed purchase of PEC's interest in SouthStar (the Purchase). Pursuant to the letter agreement, GNGC agrees to pay $160 million cash for PEC’s 15% interest in SouthStar, subject to the consummation of the merger under the Merger Agreement. Among other things, the letter agreement provides for non-solicitation of certain SouthStar employees by PEC, its parent company and their affiliates for a specified time following the Purchase, PEC’s release of its option under the LLC Agreement to purchase the C&I Customer retail business, and a non-compete by PEC, its parent company and their affiliates in the Retail Territory (as defined in the letter agreement) for a specified time following the Purchase. The letter agreement provides that the parties shall execute a definitive agreement memorializing the Purchase, which shall be subject to, among other things, the satisfaction of customary closing conditions and obtaining regulatory approvals or consents necessary to consummate the Purchase, including without limitation approval by the Georgia Public Service Commission.

Capitalized terms used herein but not otherwise defined herein shall have the meaning(s) ascribed to them in the LLC Agreement. The foregoing summary of the letter agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the letter agreement, which is attached hereto as Exhibit 10.1 and incorporated herein by reference.





Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

10.1 Letter Agreement between Georgia Natural Gas Company and Piedmont
Energy Company dated February 12, 2016





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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 hereunto duly authorized.

         
    Piedmont Natural Gas Company, Inc.
          
February 18, 2016   By:   Karl W. Newlin
       
        Name: Karl W. Newlin
        Title: Senior Vice President and Chief Financial Officer

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Exhibit Index


     
Exhibit No.   Description
 
10.1
  Letter Agreement between Georgia Natural Gas Company and Piedmont Energy Company dated February 12, 2016

Georgia Natural Gas Company
817 West Peachtree St. NW
Atlanta, Georgia 30308

CONFIDENTIAL

February 12, 2016

Via fax:
(704) 731-4097

Via overnight delivery:
Piedmont Energy Company
4720 Piedmont Row Drive
Charlotte, North Carolina 28210
Attn: Karl W. Newlin, Senior Vice President and Chief Financial Officer

Re: Letter Agreement

Dear Karl:

This letter sets forth our mutual agreement to the matters set forth in the attached Term Sheet. By this letter we both confirm that we have agreed to the matters set forth in the Term Sheet as described therein and agree to be bound thereby. Please acknowledge your agreement by countersigning where indicated below.

Sincerely yours,

GEORGIA NATURAL GAS COMPANY

By: /s/ Andrew W. Evans
Andrew W. Evans
President and COO

Acknowledged and Agreed:

PIEDMONT ENERGY COMPANY

By: /s/ Karl W. Newlin
Name: Karl W. Newlin
Title: Senior Vice President

Term Sheet Between
Georgia Natural Gas Company
And
Piedmont Energy Company
Regarding GNGC’s Proposed Purchase of Piedmont’s Interest in
SouthStar Energy Services LLC

             
           
                                                                                                                             
           
 
  1.     Parties  
Georgia Natural Gas Company, a Georgia corporation (“GNGC”) and Piedmont Energy Company, a North Carolina corporation (“Piedmont”).
           
 
  2.     Reason for Agreement  
Pursuant to that Second Amended and Restated Limited Liability Company Agreement of SouthStar Energy Services LLC (“SouthStar”) dated as of September 1, 2013 (the “LLC Agreement”), GNGC has elected under Section 12.5(a)(2) to purchase from Piedmont its 15%
interest in SouthStar (the “Transaction”).
In accordance with Section 12.5(c) of the LLC Agreement, Closing of the Transaction is expressly subject to consummation of Piedmont’s Change in Control.
Capitalized terms used herein but not otherwise defined herein shall have the meaning(s) ascribed to them in the LLC Agreement.
           
 
  3.     Valuation  
GNGC will pay Piedmont $160 million dollars in cash as the Market Value for Piedmont’s Company Interest at the closing of the Transaction (the “Closing”).
The Parties acknowledge that they have resolved their initial disagreement regarding the Market Value of Piedmont’s Company Interest to be transferred pursuant to the Transaction, and that it will not be necessary for either Party to initiate the Dispute
Resolution Procedures provided in Article XVI of the LLC Agreement with respect to the Transaction.
           
 
  4.     Distribution of
Company Income 		 
Concurrently with receiving $160 million dollars in cash for its Company Interest at Closing, SouthStar will distribute to Piedmont its share of unpaid and/or accrued Company Income and any other amounts due and owing to Piedmont through the date of
Closing as indicated in the financial statements prepared by SouthStar in connection with the Closing (see line item 6 below). No other amounts shall be paid or distributed to Piedmont at Closing.
           
 
  5.     LLC Agreement
Otherwise In Effect 		 
Except as directly addressed by this Term Sheet and any subsequent agreement memorializing its terms, the LLC Agreement shall continue to govern the relationship of the Parties in SouthStar, including, without limitation, Section 9.4 “Capital Accounts,
Allocations, and Distributions Attributable to Transferred Interest”, Section 12.5 (c) “Changes in Control”, and Section 12.7 “Transition Costs.”
           
 
  6.     Financial
Statements
Pertaining to the
Transaction 		 
SouthStar shall prepare and deliver to Piedmont and GNGC unaudited preliminary financial Statements for the period from January 1, 2016 through the most recent calendar month end preceding the Closing to assist with the proper implementation of the
relevant portions of the LLC Agreement (and as described in this Term Sheet) to the Transaction, including the Distribution of Company Income described above.
The Parties agree that SouthStar shall cause the final 2016 stub period (January 1 through the Closing date) financial statements to be audited as soon as reasonably practicable after Closing and to reconcile, and if necessary “true up,” the distribution
of Company Income to Piedmont.
           
 
  7.     Non-Solicitation of
Employees 		 
Piedmont agrees, and at Closing will cause its parent company to agree that neither they nor any of their affiliates will solicit for employment any of those individuals employed by SouthStar as listed on Exhibit A to this Term Sheet (the “Covered SSE
Employees”) for a period of thirty (30) months following Closing date, provided that, this shall not prevent Piedmont or its affiliates from (i) employing any SouthStar employee whose employment was terminated by SouthStar prior to commencement of
employment discussions between Piedmont and such employee, and (ii) placing any public advertisements or conducting any other form of general solicitation for employment that is not targeted at any of the Covered SSE Employees.
           
 
  8.     Release of Piedmont
Option Under
Section 7.4 of the
LLC Agreement 		 
At Closing, Piedmont shall irrevocably and completely release and abandon its option to Purchase C&I Customer retail business as defined in Section 7.4 of the LLC Agreement and Piedmont shall not exercise its option under Section 7.4 prior to Closing.



           
 
  9.     Non-Compete  
At Closing, Piedmont will agree and will cause its parent company to agree that neither they nor any of their affiliates will compete with SouthStar for Target Customers in the Retail Territory for a period of thirty (30) months following the Closing date.
With respect to the Transaction and the Closing, “Target Customer(s)” shall have the same meaning as that set forth in Article I of the LLC Agreement; and the definition of “Retail Territory” in Article I of the LLC Agreement shall be revised to mean (i)
the entire States of Georgia and Illinois, and (ii) in the State of Ohio, such part(s) of Ohio wherein, as of the Closing date, reside Target Customers of Vectren Energy, Dominion East Ohio, and Columbia Gas – Ohio.
Notwithstanding the foregoing, and as provided in Section 7.1(b) of the LLC Agreement, the Transaction and Closing shall not preclude Piedmont or any of its present or future affiliates from engaging in the purchase, transportation, supply, sale,
marketing, storage and/or infrastructure development of liquefied natural gas, compressed natural gas and/or natural gas vehicle facilities and/or filling stations. Provided further, and notwithstanding Section 7.1(d) of the LLC Agreement, Piedmont and
its present and future affiliates shall not be precluded from acquiring a Person or entity that has as an ancillary (but not primary) part of its business operations engaged in the purchase, transportation and sale of natural gas on a non-regulated basis
for Target Customers located in the Retail Territory.
           
 
  10.     Communications
Program 		 
The parties will agree on the language of any press release or other public communication about this Agreement or the Closing of this Transaction.
The Parties acknowledge that each of their parent companies may file a Current Report on Form 8-K and/or make other necessary disclosures to the SEC regarding this Transaction and that such filings and/or disclosures require no prior approval from the
other Party.
           
 
  11.     Regulatory
Consents/Approvals 		 
Piedmont agrees to cooperate with GNGC and SouthStar in obtaining all regulatory approvals or consents necessary to consummate the Transaction, including without limitation approval by the Georgia Public Service Commission.

           
 
  12.     Agreement;  
As required by the LLC Agreement, the Parties will memorialize the Transaction, including:
        Governing Law  
(i) any agreed upon matters expressly set forth in this Term Sheet, (ii) Piedmont providing GNGC at Closing a representation and warranty as to good and clear title to the interest being transferred, and (iii) a mutual release by each Party in favor of the
other, substantially in the form of the Conveyance and Assignment Agreement attached to the LLC Agreement as Exhibit H.
           
 
           
Governing law shall be Delaware.