El Paso Pipeline Partners to acquire interest in Southern Natural Gas

HOUSTON — El Paso Pipeline Partners LP (NYSE: EPB) has agreed to acquire an additional 22% interest in Southern Natural Gas Company (SNG) from El Paso Corp. (NYSE: EP) for $587 million.

The acquisition will increase El Paso Pipeline Partners’ interest in SNG to 82%. El Paso Corp. has granted El Paso Pipeline Partners a 45-day option to purchase up to an additional 3% interest in SNG at a price of approximately $26.7 million per one percent interest purchased.

"The acquisition of additional interests in SNG continues our momentum from 2010 and allows us to maintain our excellent distribution growth profile," said Jim Yardley, president and chief executive officer (CEO) for the general partner of El Paso Pipeline Partners.

El Paso Pipeline Partners expects to finance the transaction in a manner consistent with its current and target capital structure, which may include debt incurred under the partnership's revolving credit facility, the issuance of public securities and the issuance of a promissory note to El Paso Corp. The transaction is expected to close by the end of March 2011.

Management intends to recommend to the board of the general partner an increase in the quarterly cash distribution to $0.46 per unit, or $1.84 per unit on an annualized basis, beginning with the first quarter 2011 distribution, which will be declared and paid in the second quarter 2011. This would represent an increase of 5% from the fourth quarter 2010 distribution of $0.44 per unit and an increase of 21% above the partnership’s first quarter 2010 distribution of $0.38 per unit.

The conflicts committee engaged Tudor, Pickering, Holt & Co. to act as its independent financial advisor and to render a fairness opinion. 

Source:  El Paso Pipeline Partners LP

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