Duke Energy, which holds 77.53% interest in Maritimes & Northeast Pipeline LLC, announced Thursday that Maritimes has begun soliciting consents from holders of its 7.70% senior secured bonds due 2019. The solicitation is tied to Duke Energy's plans to spin off its natural gas-related businesses into a separate company.
The consent solicitation seeks to amend certain provisions of the indenture governing the bonds and other secured credit documents, as described in a consent solicitation statement being sent by Maritimes to all holders of the bonds as of Oct. 24 of this year.
Maritimes is pursuing the consents in order to allow Duke Capital LLC to replace Duke Energy as an original sponsor under the indenture and other secured credit documents. This would allow Duke Energy's indirect interest in Maritimes to be transferred to a separate public company (Duke GasCo) in connection with the spinoff of Duke Energy's natural gas transmission and storage, distribution, gathering and processing businesses, the Charlotte, NC-based energy company said. It noted that the spinoff of Duke Energy's other gas-related businesses is not conditioned upon the receipt of the consents.
The company is targeting a Jan. 1, 2007 effective date to spin off its gas-related businesses into a separate, autonomous company (see Daily GPI, Oct. 25). Duke Energy has estimated the gas company's total capitalization at about $15.4 billion, including $6.17 billion in equity and $8.71 billion in debt.
The change in original sponsorship is conditioned on Duke Energy receiving consents from secured parties holding at least 66.67% of the outstanding security debt of Maritimes, and other customary conditions. The solicitation will expire at 5 p.m. (EDT) on Nov. 8.
Maritimes & Northeast Pipeline is owned by affiliates of Duke Energy (77.53%), Emera Inc. (12.92%) and ExxonMobil Corp. (9.55%). Maritimes is a 670-mile pipeline that extends from Nova Scotia to Massachusetts, delivering gas from the Sable Offshore Energy Project to markets in Atlantic Canada and the Northeast United States.
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