Barclays and Bank of America Merrill Lynch are handling the 8.8 million share offering by Kinder Morgan Management LLC, a limited partner of Kinder Morgan Energy Partners, with Bracewell & Giuliani LLP counseling Kinder Morgan Management and Andrews Kurth LLP the underwriters.
Kinder Morgan Energy Partners previously said that KMI would offer to sell, or drop down, the assets to the partnership to replace cash flow from certain assets it is selling as part of KMI’s agreement with the Federal Trade Commission to complete the El Paso Corp. acquisition. Kinder Morgan Energy Partners expects to complete the divestiture process in the third quarter, and that divestitures and dropdowns will be slightly accretive to distributable cash flow this year and “nicely” accretive after that.
The 13,900-mile Tennessee Gas Pipeline serves the Northeast with access to the Marcellus and Utica shale plays, while the 10,200-mile El Paso Natural Gas pipeline serves the West, including Southern California, Arizona and northern Mexico. KMI CEO Rich Kinder said Kinder Morgan Energy Partners is purchasing world-class assets with tremendous growth opportunities at an attractive price and KMI is reducing its debt but continuing to participate in the assets’ cash flows through its general and limited partner interests in the partnership.