USA: El Paso Pipeline Partners Agrees to Acquire Additional Interests in Assets from El Paso Corporation
El Paso Pipeline Partners, L.P. today announced that it has agreed to acquire the remaining 49-percent interests in both Southern LNG Company, L.L.C. (SLNG) and El Paso Elba Express Company, L.L.C. (Elba Express) as well as an additional 15-percent interest in Southern Natural Gas Company (SNG) from El Paso Corporation for $1.133 billion. Following the acquisition, El Paso Pipeline Partners will own 100 percent of SLNG and Elba Express and a 60-percent interest in SNG.
“We are excited to announce our third drop-down transaction this year, which brings our total acquisitions to more than $2.4 billion in 2010,” said Jim Yardley, president and chief executive officer of El Paso Pipeline Partners. “This acquisition, which is immediately accretive to distributable cash flow, is our largest to date. It will continue our rapid growth, give us controlling interest in all of our assets, and simplify our ownership structure. These assets have a balance of stable cash flows supported by long-term contracts and growth opportunities as they are strategically located in a region that is expected to see the fastest future U.S. natural gas demand growth.”
El Paso Pipeline Partners expects to finance the acquisition in a manner consistent with its current and target capital structure, including $415 million of cash proceeds from the partnership’s September equity issuance and may include the issuance of public securities and the issuance of a promissory note to El Paso Corporation. The acquisition is expected to close by the end of November 2010.
Management intends to recommend to the Board of Directors of the general partner a $0.03 per unit, or 7 percent increase in the quarterly cash distribution to $0.44 per unit, or $1.76 per unit on an annualized basis, beginning with the fourth quarter 2010 cash distribution which will be declared and paid in the first quarter 2011.
The terms of the acquisition were unanimously approved by the Board of Directors of the general partner, El Paso Pipeline GP Company, L.L.C., based in part on the unanimous approval and recommendation of the Board’s conflicts committee, which is comprised entirely of independent directors. The conflicts committee engaged Tudor, Pickering, Holt & Co. to act as its independent financial advisor and to render a fairness opinion.
Source: El Paso Pipeline Partners, November 16, 2010