--Kinder Morgan to sell natural-gas pipeline and transmission
assets as part of El Paso acquisition deal
--Company will receive $1.8 billion in cash; the deal is worth
$3.3 billion including debt
--Analysts say the sale price is in line with expectations
(Adds analyst comments starting in the sixth paragraph and
updates stock prices.)
By Tess Stynes and Alison Sider
HOUSTON--Kinder Morgan Energy Partners LP (KMP) has agreed to
sell some of its Rocky Mountain natural-gas processing and pipeline
assets to Tallgrass Energy Partners LP for about $1.8 billion as
part of a deal with federal antitrust regulators to allow its
recent acquisition of El Paso Corp. to go forward.
Including debt related to one of the assets--the company's 50%
interest in the Rockies Express Pipeline--Kinder Morgan Energy said
the deal is valued around $3.3 billion.
Kinder Morgan Inc. (KMI), KMP's parent company, in March said it
agreed to sell certain KMP assets in order to receive U.S. Federal
Trade Commission approval for the roughly $21 billion El Paso deal,
which closed in May and created the largest natural-gas-pipeline
operator in North America.
The assets also include Kinder Morgan Interstate Gas
Transmission; Trailblazer Pipeline Co.; the Casper-Douglas
natural-gas processing and West Frenchie Draw treating facilities
in Wyoming.
"As I previously stated, we would prefer to keep all of these
assets, but we anticipated divestiture of certain assets in the
Rockies would be necessary to obtain FTC approval," Chairman and
Chief Executive Richard D. Kinder said.
The sale is "one of those steps you have get past to close the
deal," Raymond James analyst Darren Horowitz said, adding that the
El Paso acquisition is one that is expected to bring in "very
transparent, low-risk organic growth."
He said the price Kinder Morgan got for its assets was "right
down the fairway" of expectations. Raymond James had forecast that
the divestiture would bring in between $2.9 billion and $3.5
billion.
RBC Capital Markets analysts wrote that concluding the sale
"removes a layer of uncertainty" and allows management to focus on
other things.
Tallgrass is owned by Energy & Minerals Group, Kelso &
Co. and the management team of Tallgrass, including Chief Executive
David G. Dehaemers.
Mr. Dehaemers served as chief financial officer at Kinder Morgan
from 1997 to 2003. He also was an executive at Inergy LP (NRGY)
from 2003 to 2007 and was one of the owners of Inergy's general
partner when it went public in 2005.
Kinder Morgan Energy plans to use proceeds from the asset sales
to repay a $2 billion credit facility.
The company, which transports natural gas and coal, has been
benefiting from a rush into U.S. alternative-shale fields, while
increasing demand in Asia for coal used in steelmaking had
supported performance at its coal export terminals.
Kinder Morgan Energy's common units were down 0.5% at $82.16 in
recent trading Monday. Kinder Morgan Inc.'s Class A shares rose
1.5% to $34.73.
Write to Tess Stynes at Tess.Stynes@dowjones.com and Alison
Sider at alison.sider@dowjones.com
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