Research Update: Southwest Gas Holdings Inc. Ratings Off Watch Developing On Announced Sale And Spin-Off Transactions, Outlook Positive

Southwest Gas Holdings Inc. (SWX) announced that it has reached an agreement to sell its equity interest in MountainWest Pipeline LLC to higher-rated The Williams Cos. Inc. for $1.5 billion, including assumed debt of about $450 million. Pending approvals, we expect the transaction will close in 2023. The company also announced its plans to spin off Centuri Group Inc. into a stand-alone, fully independent public company pending approval by the Arizona Corporation Commission. We expect the spin-off of this higher-risk business will improve its consolidated business risk. We believe Centuri's 2022 financial performance will likely be weaker than we previously expected because of inflationary cost pressures and its elevated debt leverage. We removed all of our ratings on SWX and

...- Southwest Gas Holdings Inc. (SWX) announced that it has reached an agreement to sell its equity interest in MountainWest Pipeline LLC to higher-rated The Williams Cos. Inc. for $1.5 billion, including assumed debt of about $450 million. Pending approvals, we expect the transaction will close in 2023. The company also announced its plans to spin off Centuri Group Inc. into a stand-alone, fully independent public company pending approval by the Arizona Corporation Commission. We expect the spin-off of this higher-risk business will improve its consolidated business risk. We believe Centuri's 2022 financial performance will likely be weaker than we previously expected because of inflationary cost pressures and its elevated debt leverage. - We removed all of our ratings on SWX and its utility subsidiary Southwest Gas Corp. (SWG) from CreditWatch, where we placed them with developing implications on March 2, 2022. - At the same time, we placed all of our ratings on MountainWest, including...

Research Update