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, Mar 07, 2011 (MARKETWIRE via COMTEX) -- El Paso Pipeline Partners, L.P. (NYSE: EPB) announced today that it has agreed to acquire an additional 22-percent interest in Southern Natural Gas Company (SNG) from El Paso Corporation (NYSE: EP) for $587 million. The acquisition will increase El Paso Pipeline Partners' interest in SNG to 82-percent. El Paso Corporation has granted El Paso Pipeline Partners a 45-day option to purchase up to an additional 3-percent interest in SNG at a price of approximately $26.7 million per one percent interest purchased.
"The acquisition of additional interests in SNG continues our momentum from 2010 and allows us to maintain our excellent distribution growth profile," said Jim Yardley, president and chief executive officer for the general partner of El Paso Pipeline Partners. "In addition to providing immediate accretion to our unitholders, this acquisition increases our interest in SNG which is strategically located in the region with the highest expected growth rate for natural gas demand in the country."
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 March 2011.
Management intends to recommend to the Board of Directors of the general partner an increase in the quarterly cash distribution to $0.46 per unit, or $1.84 per unit on an annualized basis, beginning with the first quarter 2011 distribution, which will be declared and paid in the second quarter 2011. This would represent an increase of 5 percent from the fourth quarter 2010 distribution of $0.44 per unit and an increase of 21 percent above the partnership's first quarter 2010 distribution of $0.38 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 owns a 49 percent limited partner interest and 2 percent general partner interest in the partnership. Prior to the closing of this transaction, El Paso Pipeline Partners, L.P. owns Wyoming Interstate Company (WIC), Southern LNG Company, L.L.C. (SLNG), Elba Express Company, L.L.C. (Elba Express), a 60 percent interest in Southern Natural Gas Company (SNG), and a 58 percent interest in Colorado Interstate Gas Company (CIG). WIC and CIG are interstate pipeline systems serving the Rocky Mountain region, SLNG owns the Elba Island LNG storage and regasification terminal near Savannah, Georgia, and both Elba Express and SNG are interstate pipeline systems serving the southeastern region of the United States.
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 its sole discretion, and will depend on many factors, including El Paso Pipeline Partners' 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; our ability to meet our 2011 projections and guidance; our ability to complete the planned asset purchase from El Paso Corporation; volatility in, and access to capital markets; our ability to obtain necessary governmental approvals for proposed pipeline projects and to successfully construct such projects on a timely basis and within estimated costs; operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond our control; the risks associated with contracting and recontracting of transportation commitments; regulatory uncertainties associated with pipeline rate cases; actions taken by customers, 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' (and its affiliates') 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.
SOURCE: El Paso Pipeline Partners