CorEnergy to Acquire MoGas Pipeline for $125 Million

Source: www.gulfoilandgas.com 11/17/2014, Location: North America

CorEnergy Infrastructure Trust, Inc. (CorEnergy) announced that it has entered into a definitive agreement to acquire the ownership and operations of the MoGas Pipeline System for $125 million in cash (the “Acquisition”). This 263-mile pipeline is a critical supplier of natural gas in and around the St. Louis region and to small municipalities throughout central Missouri.

“Our Board of Directors has confirmed its intent to increase the dividend from $0.130 to $0.135 for the quarter ended March 31, 2015 (or $0.54 cents per share annualized) based upon management’s expectation that the increase is sustainable.”

CorEnergy intends to finance the acquisition cost with a combination of borrowings under its credit facility and with proceeds of our simultaneously announced public offering of common stock.

The key characteristics of the MoGas Pipeline System include:
- Diversification towards a new segment of the energy value chain, with exposure to a long-haul natural gas pipeline serving end-user markets
- Key interconnect receipt points on three natural gas transmission pipelines
- Steady revenue stream backed by contracts with long-tenured, creditworthy customers
- Stable history of both firm and interruptible contracted volumes
- Pipeline assets are REIT qualifying under proposed IRS regulations

“We are pleased to add an interstate pipeline to our diversified portfolio of infrastructure assets used by utilities, storage terminal operators, and natural gas producers,” said David Schulte, Chief Executive Officer of CorEnergy. “Our Board of Directors has confirmed its intent to increase the dividend from $0.130 to $0.135 for the quarter ended March 31, 2015 (or $0.54 cents per share annualized) based upon management’s expectation that the increase is sustainable.”

The MoGas Pipeline System:
The MoGas Pipeline System is an approximately 263-mile interstate natural gas pipeline system which originates in northeast Missouri, and extends into western Illinois and central Missouri. The pipeline maintains receipt points with Mississippi River Transmission Corporation in eastern St. Louis and with Panhandle Eastern Pipe Line Company and Rockies Express Pipeline on the northern end of the system.

Primary customers are Laclede Gas Company and Ameren Missouri, both serving the St. Louis metropolitan area with local gas distribution services, and Omega Pipeline serving Ft. Leonard Wood in central Missouri. Omega Pipeline is a wholly owned subsidiary of CorEnergy. Transportation agreements are governed by FERC-approved natural gas tariffs.

Transaction Financing
In conjunction with the Acquisition, the Company has signed a commitment letter to amend and upsize its current $30 million revolving senior secured credit facility. The new revolving lines of credit have anticipated capacity of up to $93 million, consisting of $90 million at the parent entity level and $3 million at the subsidiary entity level. The Company expects to utilize borrowings under the credit facility, and the net proceeds of our simultaneously announced equity offering to fund the purchase price.

The transaction is expected to close in late November 2014.

BofA Merrill Lynch is acting as exclusive structuring advisor in connection with CorEnergy's energy infrastructure real asset strategy.




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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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