On April 28, El Paso Pipeline Partners LP (EPB) acquired, through a dropdown sale, 50% working interest in the Ruby Pipeline, 50% working interest in the Gulf LNG and 47.5% working interest in Young Gas Storage from Kinder Morgan Inc. (NYSE: KMI).
The 680-mile natural gas Ruby Pipeline runs from Wyoming to Oregon, the Gulf LNG terminal in Pascagoula, Miss. stores 6.6 billion cubic feet per day of LNG and Young Gas Storage, in Morgan County, Colo., can store about 6 billion cubic feet of natural gas.
The transaction is worth $2 billion, BusinessWire said, noting that from that amount, $1.012 billion is proportionate debt at Ruby and Gulf LNG.
That debt amount resulted in an equity purchase price of $972 million, BusinessWire said, noting that the purchase is scheduled to close in May.
The purchase was approved by Kinder Morgan’s board of directors, and by the board of directors and conflicts committee of El Paso Pipeline’s general partner, BusinessWire said.
The approvals came after the receipt of separate fairness opinions from different investment banks, BusinessWire added.
El Paso Pipeline made the purchase at about nine times the EBITDA for 2013, and will fund 10% of the transaction value with common units issued to Kinder Morgan, BusinessWire said. The units will be offered at closing and are worth $97.2 million, BusinessWire added.
The remaining value should be funded through the proceeds of at least one equity or debt issuance, and perhaps from credit facility borrowings, BusinessWire said.
Proceeds from the dropdown sales will be used by Kinder Morgan to pay debts, BusinessWire added.
El Paso Pipeline Partners was acquired by midstream company Kinder Morgan Inc., which is based in Houston.
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