“This transaction advances our strategy to extend and diversify TSX’s pre-eminent position in Canada while looking for opportunities to grow in the United States,” said Barbara Stymiest, TSX Group’s Chief Executive Officer. “The addition of NGX significantly extends our product and service offering, while at the same time expanding our reach outside of Canada.”
"Through the divestment of NGX, we are sharpening our focus on the financial markets," said Magnus Böcker, President and Chief Executive Officer of OMHEX. “We are very pleased that NGX will find a new home in the TSX group of companies, the operator of Canada's two national stock exchanges, and we look forward to evaluating the possibilities of further cooperation with TSX."
“We are delighted to be joining the TSX family,” said Peter Krenkel, Chief Executive Officer of NGX. “TSX’s market position and expertise will strongly support the expansion and development of our business.”
Based in Calgary, NGX enables energy traders to trade and clear natural gas spot, forward and swap contracts and electricity swap contracts. Since its founding in 1993 by WestCoast Energy Inc. and its acquisition in 2000 (51%) and 2001 (remaining 49%) by OMHEX, NGX has developed into one of North America’s leading players in natural gas and electricity trading, with a strong market model, solid customer base, consistent revenue growth and profitability. Based on preliminary results for the year ended December 31, 2003, NGX had revenues of $13.9 million and net income of $3.4 million, and had, at December 31, 2003, total assets of $415.3 million and a net book value of $13.4 million including cash of $12.6 million.
As part of its clearing operations, NGX becomes the counterparty in each transaction thereby guaranteeing the fulfillment of every contract that is executed on its electronic trading platform. To manage the risk associated with this activity NGX is fully collateralized and maintains a $30 million clearing backstop fund. As part of the transaction, TSX Group will become the guarantor of this fund in place of OMHEX.
The acquisition of NGX was facilitated through an arrangement reached with Montréal Exchange Inc. that considers the memorandum of agreement signed in 1999, at the time of the realignment of Canadian capital markets. This arrangement includes a payment to the Montréal Exchange totalling $5 million as well as the potential for future collaboration with respect to NGX’s trading and clearing services.