Dominion Midstream Partners LP has agreed to acquire the 25.93% interest in Iroquois Gas Transmission System LP owned by utilities National Grid plc and New Jersey Resources Corp. in an all stock deal valued at $286.5 million.
Dominion already owns a 24.72% interest in the interstate pipeline. If the deal is completed, the company would become the system's majority owner, leaving TransCanada Corp with a 44.48% ownership interest and Iberdrola USA with a 4.87% ownership interest.
In exchange for the additional stake, Dominion would issue 6.8 million common units valued at $225.4 million to National Grid and 1.8 million common units to New Jersey Resources that are valued at $61.1 million. The utilities would also be granted certain registration rights for future Dominion equity offerings.
Dominion Midstream went public in October 2014 (see Daily GPI, Oct. 17, 2014; Oct. 9, 2014). It was formed to own the Cove Point liquefied natural gas terminal in Maryland. The partnership expects its ownership in Cove Point, Carolina Gas Transmission and Iroquois to support its stated annual cash distribution growth rate of 22% through 2016, which would eliminate any need for dropdowns during that time. Dominion Resources Inc.owns a 68.5% interest in Dominion Midstream.
The 416-mile Iroquois gas transmission system extends from the U.S.-Canada border through New York and Connecticut to South Commack, NY, on Long Island and Hunts Point, NY, in the Bronx.