CMS Energy signed an agreement to sell its CMS Field Services subsidiary to Cantera Resources Inc. for $115.5 million cash plus a $50 million face-value note payable from 2004 through 2008 and contingent on the financial performance of the Fort Union and Bighorn natural gas gathering systems in Wyoming.

CMS Field Services provides gathering, compression, treating and processing services for natural gas and natural gas liquids and has facilities in Oklahoma, Texas, Louisiana, and Wyoming. Cantera is a subsidiary of Morgan Stanley Capital Partners and owns and operates six processing facilities and more than 2,000 miles of gathering pipelines in Texas.

The sale is part of CMS’ continuing effort to strengthen liquidity and reduce debt as part of a “back-to-basics” strategy focused on its utility operations, said CEO Ken Whipple (see NGI, May 12).

“The sale…will help us increase our financial flexibility and focus on our core businesses,” he said. “The goal of our back-to-basics strategy is to be a smaller, stronger company with less business risk and more predictable earnings. There are still many challenges ahead, but this sale helps us to build on the progress we’ve already made.

“Our asset sales plan remains on course,” he added. “With the CMS Field Services transaction, we have completed or announced more than $3.8 billion in asset sales, including assumed debt, in 2002 and so far in 2003. Yesterday, we announced that we have modified the agreement for the biggest transaction on that list, the $1.8 billion sale of the CMS Panhandle Companies. The modified agreement should help resolve pending regulatory issues and we anticipate it will clear the way for the Panhandle sale to close by June 30.”

CMS announced Monday under the modified agreement, AIG Highstar Capital LP., a private equity fund sponsored by American International Group, will withdraw from the Panhandle transaction, making Southern Union the sole purchaser of the interstate gas pipeline business (see related story). The companies said that AIG Highstar’s withdrawal will help resolve regulatory issues that arose as a result of AIG Highstar’s ownership of Southern Star Central Gas Pipeline Inc., which it purchased last year from Williams.

The Field Services sale is expected to close during the second quarter. The proceeds will be used to reduce debt, CMS said.

CMS retains ownership of CMS Taurus Field Services LP, owner of the Shackelford processing plant, located in Callahan County, TX, and the associated gathering system, but the company plans to sell CMS Taurus Field Services in the near future.

©Copyright 2003 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.