11.07.2016. Southern Company (SoCo) and Kinder Morgan, Inc are launching a natural gas pipeline venture through Southern Company’s acquisition of a 50 percent stake in the Southern Natural Gas (SNG) pipeline system.
Kinder Morgan will continue to operate the system. In addition, the agreement commits the companies to develop natural gas infrastructure for the venture.
SNG is a 7,600 mile pipeline system connecting natural gas supply basins in Texas, Louisiana, Mississippi, Alabama and the Gulf of Mexico to markets in Louisiana, Mississippi, Alabama, Florida, Georgia, South Carolina and Tennessee.
Inclusive of existing SNG debt, the transaction equates to an SNG total enterprise value of approximately US$4.15 billion which implies a value of $1.47 billion for Southern Company’s 50 percent share of the equity interest. Southern Company expects to finance the initial purchase, as well as any related future growth opportunities in a credit-supportive manner.
The transaction is subject to the notification and clearance and reporting requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The companies expect to complete the transaction in the third quarter or early in the fourth quarter of 2016.
11th July 2016
