Kinder Morgan Transfers $300M in Assets to MLP
Kinder Morgan, Inc. announced plans to contribute $300 million in assets to Kinder Morgan Energy Partners, L.P., the company's master limited partnership. The largest asset to be contributed is Kinder Morgan Texas Pipeline, formerly MidCon Texas, a 2,600-mile natural gas pipeline system that extends from South Texas to Houston along the Texas Gulf Coast.
Other assets include the Casper and Douglas Gas Gathering and Processing Systems, KMI's 50% interest in Coyote Gas Treating and KMI's 25% interest in Thunder Creek Gas Services. As consideration for the assets, KMI will receive $300 million, 50% in cash and 50% in KMP partnership units. KMI expects the transaction to be completed in the fourth quarter.
"This transaction represents a true win-win for both KMI and KMP," said Kinder Morgan CEO Rich Kinder. "It is expected to be accretive to cash available for distribution to KMP's unitholders by between 5-10 cents in 2001. The pipeline assets are a good fit for KMP because they complement existing KMP assets, have long-term contracts in place and offer significant growth opportunities." Kinder noted that because the mix of consideration paid will include equity issued to KMI, it will not be necessary to raise funds for the transaction via a public offering of KMP units.
"KMI will also benefit from the transaction, as it will be able to reduce its debt by $150 million," Kinder said. "Additionally, the transaction is expected to be modestly accretive to KMI's earnings per share in 2001. By increasing its stake in the master limited partnership, KMI will enjoy greater participation in the expected future growth of KMP."
Upon closing, KMP will have completed in excess of $600 million of acquisitions in 2000. In addition, this transaction will boost KMI's total asset contribution to KMP to more than $1 billion, far exceeding the original goal stipulated when Kinder Morgan merged with KN Energy last July.
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