El Paso Corp. (ticker: EP, exchange: New York Stock Exchange (.N))
News Release -
El Paso Pipeline Partners Agrees to Acquire Additional Interest in Southern Natural Gas Company From El Paso Corporation
HOUSTON, TX, Jun 17, 2010 (MARKETWIRE via COMTEX) --El Paso Pipeline Partners, L.P. (NYSE: EPB) announced today that it has agreed to acquire an additional 16 percent interest in Southern Natural Gas Company (SNG) from El Paso Corporation (NYSE: EP) for approximately $394 million. The acquisition will increase El Paso Pipeline Partners' interest in SNG to 41 percent. El Paso Corporation has granted El Paso Pipeline Partners a 90-day option to purchase up to an additional 4 percent interest in SNG at a price of approximately $25 million per percent interest purchased.
"We are pleased to announce the partnership's fourth acquisition from El Paso Corporation, which further consolidates our growing asset base," said Jim Yardley, president and chief executive officer for the general partner of El Paso Pipeline Partners. "The acquisition, which is immediately accretive to distributable cash flow, increases our interest in the Southeast's premier natural gas transmission franchise. SNG's strategically located assets are supported by consistent, strong cash flows and continued organic growth opportunities."
El Paso Pipeline Partners expects to finance the transaction in a manner consistent with its current and target capital structure, which may include debt incurred under the partnership's revolving credit facility, the issuance of public securities and the issuance of a promissory note to El Paso Corporation. The transaction is expected to close by the end of June 2010.
Management intends to recommend to the Board of Directors of the general partner an increase in the quarterly cash distribution to $0.40 per unit, or $1.60 per unit on an annualized basis, beginning with the second quarter 2010 distribution, which will be declared and paid in the third quarter 2010. This represents an increase of 5 percent from the first quarter 2010 distribution of $0.38 per unit and an increase of 21 percent above the partnership's second quarter 2009 distribution of $0.33 per unit.
The terms of the transaction 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.
El Paso Pipeline Partners, L.P. is a Delaware limited partnership formed by El Paso Corporation to own and operate natural gas transportation pipelines and storage assets. El Paso Corporation currently owns approximately 62 percent of the limited partner units, and the 2 percent general partner interest. El Paso Pipeline Partners, L.P. owns Wyoming Interstate Company, L.L.C., an interstate pipeline system serving the Rocky Mountain region, a 58 percent interest in Colorado Interstate Gas Company which operates in the Rocky Mountain region, a 51 percent interest in Southern LNG Company, L.L.C., which owns the Elba Island LNG storage and regasification terminal near Savannah, Georgia, a 51 percent interest in El Paso Elba Express Company, L.L.C., and a 25 percent interest in Southern Natural Gas Company prior to the effect of the announced acquisition. Both Elba Express and SNG are interstate pipeline systems serving the southeastern region of the United States. For more information about El Paso Pipeline Partners, visit www.eppipelinepartners.com.
Cautionary Statement Regarding Forward-Looking Statements
This release includes forward-looking statements and projections. El Paso Pipeline Partners has made every reasonable effort to ensure that the information and assumptions on which these statements and projections are based are current, reasonable, and complete. However, a variety of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this release, including, without limitation, that the amount of cash distributions declared will be determined on a quarterly basis by the board of directors of our general partner, in their sole discretion, and will depend on many factors, including El Paso Pipeline Partner's financial condition, earnings, cash flows, capital requirements, financial covenants, legal requirements and other factors deemed relevant by the board of directors of our general partner; and our ability to achieve projected growth rates will depend on many different factors, including, without limitation, the ability to obtain necessary governmental approvals for proposed pipeline projects and to successfully construct expansion projects on time and within budget; operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond our control; the risks associated with recontracting of transportation commitments; regulatory uncertainties associated with pipeline rate cases; actions taken by third-party operators, processors and transporters; conditions in geographic regions or markets served by El Paso Pipeline Partners and its affiliates and equity investees or where its operations and affiliates are located; the effects of existing and future laws and governmental regulations; competitive conditions in our industry; changes in the availability and cost of capital; and other factors described in El Paso Pipeline Partners' Securities and Exchange Commission filings. While these statements and projections are made in good faith, El Paso Pipeline Partners and its management cannot guarantee that anticipated future results will be achieved. Reference must be made to those filings for additional important factors that may affect actual results. El Paso Pipeline Partners assumes no obligation to publicly update or revise any forward-looking statements made herein or any other forward-looking statements made, whether as a result of new information, future events, or otherwise.
Contacts: Investor-Media Relations
SOURCE: El Paso Pipeline Partners