El Paso Corp. (ticker: EP, exchange: New York Stock Exchange (.N))
News Release -
El Paso Pipeline Partners Completes Acquisition From El Paso Corporation; Management Intends to Recommend Distribution Increase
HOUSTON, TX, Jun 29, 2011 (MARKETWIRE via COMTEX) --
El Paso Pipeline Partners, L.P. (NYSE: EPB) announced today that it has completed the acquisition of an additional 28-percent interest in Colorado Interstate Gas Company (CIG) and the remaining 15-percent interest in Southern Natural Gas Company (SNG) from El Paso Corporation (NYSE: EP) for $745 million. The acquisition increases El Paso Pipeline Partners' interest in CIG to 86 percent and its interest in SNG to 100 percent.
"We are very pleased with our latest acquisition, which is immediately accretive to distributable cash flow and continues our rapid pace of growth," said Jim Yardley, president and chief executive officer for the general partner of El Paso Pipeline Partners. "Our partnership has owned interests in CIG and SNG since its initial public offering, and these pipelines have consistently generated strong cash flows for our unit holders. This transaction further enhances our excellent positions in the Rocky Mountain producing region, Front Range of Colorado and southeast U.S."
EPB recently issued approximately 14.7 million units, which raised $501 million of net cash proceeds, including the general partner's contribution to maintain its 2 percent interest in the partnership. EPB utilized these proceeds in combination with borrowings under its revolving credit facility to fund the transaction.
Management intends to recommend to the Board of Directors of the general partner an increase in the quarterly cash distribution to $0.48 per unit, or $1.92 per unit on an annualized basis, beginning with the second quarter 2011 distribution, which will be declared and paid in the third quarter 2011. This would represent an increase of 4 percent from the first quarter 2011 distribution of $0.46 per unit and an increase of 20 percent above the partnership's second quarter 2010 distribution of $0.40 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 42 percent limited partner interest and 2 percent general partner interest in the partnership. El Paso Pipeline Partners, L.P. owns Wyoming Interstate Company, L.L.C. (WIC), Southern LNG Company, L.L.C. (SLNG), Elba Express Company, L.L.C. (Elba Express), Southern Natural Gas Company, and an 86 percent interest in Colorado Interstate Gas Company. 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.
Disclosure of Non-GAAP Financial Measures
The SEC's Regulation G applies to any public disclosure or release of material information that includes a non-GAAP financial measure. In the event of such a disclosure or release, Regulation G requires (i) the presentation of the most directly comparable financial measure calculated and presented in accordance with GAAP and (ii) a reconciliation of the differences between the non-GAAP financial measure presented and the most directly comparable financial measure calculated and presented in accordance with GAAP.
El Paso Pipeline Partners uses the non-GAAP financial measure "Distributable Cash Flow" to measure its cash generation ability. The partnership defines Distributable Cash Flow as Adjusted EBITDA less cash interest expense, maintenance capital expenditures, and other income and expenses, net, which primarily includes non-cash allowance for funds during construction and other non-cash items. Distributable Cash Flow does not reflect changes in working capital balances. Adjusted EBITDA is defined as net income plus depreciation and amortization expense, interest and debt expense, net of interest income and the partnership's share of cash distributions from equity interests, less equity in earnings.
El Paso Pipeline Partners believes that the non-GAAP financial measures described above are also useful to investors because these measurements are used by many companies in the industry as a measurement of operating and financial performance and are commonly employed by financial analysts and others to evaluate the operating and financial performance of the partnership and to compare the operating and financial performance of the partnership with the performance of other publicly traded partnerships within the industry.
These non-GAAP financial measures may not be comparable to similarly titled measurements used by other companies and should not be used as a substitute for net income, earnings per unit, cash flow from operating activities or other GAAP operating measurements.
Cautionary Statement Regarding Forward-Looking Statements
This release includes forward-looking statements and projections, made in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 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, the ability to meet our 2011 projections and guidance; our ability to complete planned asset purchases from El Paso Corporation; volatility in, and access to capital markets, the 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.
Bruce L. Connery
SOURCE: El Paso Pipeline Partners