Kinder Morgan Inc. (KMI) has completed the sale of its U.S. natural gas retail distribution and related operations to GE Energy Financial Services and Alinda Investments LLC for $710 million plus working capital (see Daily GPI, Aug. 15, 2006).

The operations serve more than 260,000 residential, commercial, agricultural and industrial customers in Colorado, Nebraska, Wyoming and Hermosillo, Mexico through more than 11,900 miles of transmission and distribution pipelines, underground storage fields and related facilities.

This first transaction by GE Energy Financial Services in a retail gas distribution business gives the company an opportunity for expansion, GE said. The GE unit also has investments in 7,700 miles of North American interstate gas pipelines. GE Energy Financial Services CEO Alex Urquhart said the former KMI assets provide "an excellent platform to grow our investment in retail gas distribution."

Alinda Investments, an affiliate of Alinda Capital Partners LLC, is a privately held investor in infrastructure assets and is 50% owner of the former KMI assets.

The retail distribution business will remain headquartered in in Lakewood, CO, with President Dan Watson in place. The business will continue to operate as Kinder Morgan Retail for about 60 days spanning the "Choice Gas" customer selection period and will launch its new identity during May. The new company continues to administer all selections made by customers during the upcoming Choice Gas selection period, including all Kinder Morgan supplier options.

The sale does not include Terasen Gas, the British Columbia natural gas utility that KMI purchased in November 2005 (see Daily GPI, Aug. 2, 2005).

"This is a good business that produces stable cash flow," KMI CEO Rich Kinder said last year when the sale to GE was announced. "However, given our small retail footprint within the United States and the proceeds KMI will receive, the sale makes sense for our shareholders." Upon closing, KMI expects to recognize a book gain from this transaction and will use proceeds from the sale to retire debt and repurchase stock.

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