MBO's Clients Complete Natural Gas Prepaid Transactions

In July 2006, the Tennessee Energy Acquisition Corporation entered into a 20-year Prepaid Natural Gas Sales Agreement with gas supplier J. Aron & Company, a wholly-owned general partnership of The Goldman Sachs Group, Inc. Under the agreement, J. Aron will sell and deliver approximately 486 Bcf of natural gas to TEAC, which in turn will sell the gas to 17 members and other project participants, including the Municipal Gas Authority of Georgia. To finance the purchase, TEAC issued more than $2.1 billion in public debt. This was the largest transaction of its kind ever. The Firm is general counsel to TEAC.

TEAC President and General Manager Mark McCutchen said the transaction will save 17 of TEAC's member systems and nine other regional systems approximately $40,000 per day over the next 20 years.

In June 2006, Miller, Balis & O'Neil, P.C. served as special gas counsel to the Public Energy Authority of Kentucky in conjunction with its $1.03 billion acquisition of natural gas supply, which was the largest such transaction until the TEAC financing. PEAK purchased approximately 170 Bcf from BP Energy Company to be delivered over a ten-year period.

In each instance, our Firm was responsible for drafting the necessary purchase and sales agreements, supply contracts with the agency's customers, and ISDA agreements, as well as the review of finance documentation.

Questions about the details of the transactions may be addressed to Jim Choukas-Bradley or John Gregg.