Moon Township, PA-based Atlas Pipeline Partners LP said Tuesday that it has entered into an agreement to acquire Alaska Pipeline Company (APC) from SEMCO Energy Inc. for $95 million in cash.

APC owns and operates the high-pressure gas pipelines that transport gas from Alaska’s Cook Inlet gas fields to ENSTAR Natural Gas Co.’s distribution system and various ENSTAR commercial customers. ENSTAR — a division of SEMCO — serves 112,000 customers in south-central Alaska, including Anchorage. APC has no employees and ENSTAR is APC’s only customer.

Under the agreement, ENSTAR — which will remain a division of Farmington Hills, MI-based SEMCO — has committed to use APC exclusively for its gas transmission service to Anchorage for a period of ten years and will continue to provide operating and maintenance services to APC for a period of at least five years. In its current configuration, APC’s system capacity is 410 MMcf/d, with an average throughput during 2002 of 132 MMcf/d.

“We expect the APC acquisition to be accretive to our unitholders while keeping our debt to total capital at a conservative ratio,” said Michael Staines, president of Atlas’ general partner, a subsidiary of Resource America Inc. “APC will provide Atlas with a significant and reliable source of additional income based on fixed capacity reservation and volumetric transportation fee components. This is an excellent complement to our current sources of income that are highly subject to the variable selling price of the gas we transport. We also anticipate strong growth possibilities as the APC system is expanded to serve the growing needs of the Anchorage area.”

The companies noted that the sale is structured to have no effect on ENSTAR’s customers or employees. There are no plans to change rates, the services offered, pipeline operations, customer service, gas supply, or staffing as a result of the sale. The sale is subject to various regulatory approvals, including approval by the Regulatory Commission of Alaska.

“SEMCO Energy’s mission is to provide excellent service to its customers and an attractive investment return to its shareholders,” said Marcus Jackson, SEMCO Energy’s CEO. “We have been pursuing actions, including the sale of certain company assets, that will pay down debt in order to improve the financial position and thus the long-term value of the company. The proceeds from the sale of APC will be used to reduce debt and is consistent with the goal of improving our capital structure.”

RBC Capital Markets acted as Atlas’ financial advisor and Wachovia Bank, National Association and Friedman Billings Ramsey & Co. Inc. will provide financing for the acquisition of APC. McDonald Investments Inc. acted as adviser to SEMCO in the transaction.

Atlas Pipeline Partners, LP. owns and operates more than 1,380 miles of natural gas gathering pipelines in western Pennsylvania, western New York and eastern Ohio. SEMCO Energy distributes gas to more than 385,000 customers combined in Michigan, as SEMCO Energy Gas Co., and in Alaska, as ENSTAR Natural Gas Co.

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