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SEMPRA - POTENTIAL DIVESTITURES | 9 Months Ended
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Sep. 30, 2025
Discontinued Operations and Disposal Groups [Abstract] |
SEMPRA - POTENTIAL DIVESTITURES | SEMPRA – POTENTIAL DIVESTITURES SEMPRA INFRASTRUCTURE Assets Held for Sale We classify assets as held for sale once all applicable criteria under U.S. GAAP have been satisfied, including when management, having the authority to approve the action, commits to a formal plan to actively market an asset for sale and expects the sale to close within the next twelve months. Upon classifying a group of assets as held for sale, we record the disposal group at the lower of its carrying value or its estimated fair value reduced for selling costs, and we stop recording depreciation and amortization expense on those assets. We summarize the carrying amounts of the major classes of assets and related liabilities of SI Partners, inclusive of Ecogas, classified as held for sale in the following table.
ASSETS HELD FOR SALE |  |
(Dollars in millions) |  |
|  | September 30, 2025
Cash and cash equivalents |  | $ | 126 |
Restricted cash, current |  | 2,889 |
Accounts receivable |  | 589 |
Due from unconsolidated affiliates |  | 3 |
Inventories |  | 103 |
Other current assets |  | 246 |
Restricted cash, noncurrent |  | 3 |
Right-of-use assets – operating leases |  | 202 |
Equity method investments |  | 2,471 |
Goodwill |  | 1,602 |
Other intangible assets |  | 273 |
Other long-term assets |  | 768 |
Property, plant and equipment, net |  | 19,190 |
Total assets held for sale |  | $ | 28,465 |
Short-term debt |  | $ | 897 |
Accounts payable |  | 1,247 |
Current portion of long-term debt |  | 49 |
Other current liabilities |  | 305 |
Long-term debt |  | 6,791 |
Due to unconsolidated affiliates |  | 417 |
Deferred income taxes |  | 901 |
Asset retirement obligations |  | 93 |
Deferred credits and other |  | 475 |
Total liabilities held for sale |  | $ | 11,175 |
At September 30, 2025, $28 million of accumulated losses is included in AOCI and is part of the disposal group that is held for sale. We considered the estimated fair value of our assets held for sale, less costs to sell, and determined that no adjustment to carrying value was required. In estimating fair value, we used a discounted cash flow valuation technique. In the event that the estimated sales price, less transaction costs, is less than the carrying value, or updated market information indicates fair value may be less than carrying value, we would recognize a loss in our results of operations at that time. SI Partners In September 2025, we entered into an agreement to sell 45% of the outstanding Class A Units and all general partner interests in SI Partners to the KKR Partners for an aggregate base purchase price of approximately $9.99 billion, subject to the adjustments described below. SI Partners owns LNG and natural gas infrastructure in the U.S. and Mexico and renewable energy and related assets in Mexico. Subject to adjustments, the purchase price will be paid to Sempra as follows: ▪$4.65 billion in cash at closing; ▪$4.14 billion plus interest compounded quarterly at 7.5% per annum (totaling $4.72 billion with principal and accrued interest unless paid early) due December 31, 2027 under instruments backed by equity commitment letters; and ▪$1.2 billion plus interest compounded quarterly at 8.5% per annum before January 1, 2031 and 10.0% per annum thereafter (totaling $2.29 billion with principal and accrued interest unless paid early) due seven years and 91 days after closing under promissory notes. The instruments and notes will be issued by indirect equity holders of the KKR Partners and will be ranked behind senior debt incurred by subsidiaries of the issuers. The purchase price is subject to adjustments for changes in net debt, net working capital and capital expenditures as of December 31, 2025, among others. The purchase price is subject to further adjustments for certain capital contributions by and distributions to Sempra in 2026 before the closing. In addition, transaction fees of the KKR Partners of $337.5 million will be deducted from the purchase price at the closing and a development credit of $340 million will be payable by Sempra over two years starting in 2026. There may also be post-closing purchase price adjustments based on the performance through 2028 of certain wind power facilities, and an adjustment payable by Sempra for capital expenditures related to the ECA LNG Phase 1 project under construction. We expect the sale to close in the second or third quarter of 2026, subject to expiration of the waiting period under the Hart-Scott-Rodino Act; receipt of applicable regulatory approvals, such as antitrust approvals in Mexico and approval by the FERC; receipt of certain other third-party consents or waivers; the absence of a material adverse effect on SI Partners; the absence of specific downgrade events under certain financing arrangements; and other customary closing conditions. Because the closing cannot occur before March 31, 2026, a ticking fee payable to Sempra of 0.625% per month on the aggregate base purchase price will accrue daily beginning April 1, 2026. If the KKR Partners fail to complete the closing when all closing conditions are satisfied, Sempra will receive a termination fee of $414 million. Any party may terminate the agreement if the closing has not occurred within 12 months after signing. Subject to closing, the KKR Partners will own 65% of SI Partners, Sempra will retain a 25% interest and ADIA will retain a 10% interest. As we discuss below, the KKR Partners will have control of SI Partners and Sempra and ADIA will have certain minority rights in SI Partners. As a result of our loss of control upon completion of the sale, we will deconsolidate SI Partners and account for our 25% interest in SI Partners under the equity method within the existing Sempra Infrastructure segment. In connection with signing the agreement for the sale, in September 2025, we classified SI Partners as held for sale, ceased recording depreciation and amortization, and recognized $514 million in Income Tax Expense on Sempra’s Condensed Consolidated Statements of Operations to (i) adjust deferred income tax liabilities related to outside basis differences in our investment in SI Partners, (ii) account for changes to state income tax apportionment, and (iii) account for valuation allowances against certain tax credit carryforwards. The amount of this charge is based on certain assumptions and could change substantially in subsequent quarters and at the closing due to, among other things, changes to current carrying values, changes in forecasted taxable income, purchase price adjustments, and changes to tax positions and other assumptions. Post-Closing Limited Partnership Agreement. At closing, we will enter into an amended and restated limited partnership agreement with the KKR Partners and ADIA. The limited partnership agreement provides that the KKR Partners will have the right to appoint four managers, Sempra will have the right to appoint two managers, and ADIA will have the right to appoint one manager to the SI Partners board of managers, with matters decided by majority vote based on the limited partners’ ownership percentages. The minority partners will have certain minority consent rights so long as they maintain specified ownership thresholds. Subject to exceptions and limitations, SI Partners will be prohibited from taking certain actions, including, among others: (i) redeeming units or making distributions to its limited partners other than on a pro rata basis or as expressly permitted under the partnership agreement; (ii) under certain circumstances, transferring, disposing or issuing equity securities in any subsidiary undertaking or owning a project that has reached a positive FID; (iii) appointing a replacement chief executive officer; (iv) approving certain capital expenditures; and (v) reaching a positive FID on any project, in each case without prior approval from KKR, Sempra and, in some cases, other limited partners holding at least a specified minimum percentage of ownership. SI Partners will be required to distribute quarterly at least 85% of its distributable cash flow, subject to certain exceptions and reserves. Generally, distributions will be made to the limited partners on a pro rata basis in accordance with their respective ownership interests, except that the KKR Partners will be entitled to a post-closing distribution of an additional 31.5% of the $1.9 billion true-up payment from Port Arthur LNG II to Port Arthur LNG I to acquire a 50% interest in the shared common facilities. The limited partners will be required to fund capital calls under certain circumstances, which vary depending on whether a project has reached positive FID. Sempra will continue to have substantially similar funding obligations as it has before the sale for cost overruns in certain projects, including the ECA LNG Phase 1 project and the PA LNG Phase 1 project. If a project fails to receive the required limited partner approvals to achieve FID, the KKR Partners will be permitted to proceed with the project independently through a different investment vehicle or as a “Sole Risk Project” within SI Partners in exchange for “Sole Risk Interests.” Sole Risk Projects are separated from other SI Partners projects and are conducted at the holder’s sole cost, expense and liability, and the holder receives, through the acquisition of Sole Risk Interests, the economic and other benefits, if any, from such projects. The Guaymas-El Oro segment of the Sonora pipeline will continue to be owned by and a Sole Risk Project of Sempra. Sempra is solely responsible for costs associated with the pipeline and any proceeds from a sale of the pipeline would be split between Sempra (90%) and ADIA (10%), subject to adjustments. Under the limited partnership agreement, Sempra will be restricted from transferring its ownership interest in SI Partners before January 1, 2029. Any proposed transfer (other than a permitted transfer) by a minority partner to a third party will be subject to a right of first offer of the KKR Partners. The minority partners will have co-sale rights in respect of any transfer by the KKR Partners of over 50% of SI Partners’ equity interests. The KKR Partners will have customary drag-along rights in connection with any sale of SI Partners, provided that the minority partners obtain minimum return thresholds. The limited partners have customary registration rights in the event of an initial public offering of SI Partners. Ecogas In June 2025, management committed to a formal plan to market and sell Ecogas, a natural gas regulated distribution utility that operates in three separate distribution zones in Mexicali, Chihuahua and La Laguna-Durango, Mexico. We expect to complete the sale in the second or third quarter of 2026. As a result of satisfying all applicable criteria, we classified Ecogas’ assets and liabilities as held for sale and ceased depreciation and amortization. In connection with classifying Ecogas as held for sale, we recognized $38 million in Income Tax Expense on Sempra’s Condensed Consolidated Statement of Operations in the nine months ended September 30, 2025 for a Mexican deferred income tax liability related to the excess of carrying value over the tax basis (outside basis difference). Since this $38 million ($26 million after NCI) of Mexican income tax expense on our outside basis difference is based on current carrying value, foreign exchange rates and inflation at September 30, 2025, this amount could change in future periods until the date of sale.

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