Transaction Type
Announce Date
Post Date
Estimated Price

To acquire remaining 49% WI in both Southern LNG and El Paso Elba Express and an additional 15% WI in Southern Natural Gas, gaining interest in midstream assets in GA, SC, TN & FL.

El Paso Pipeline Partners LP, Houston, (NYSE: EPB) plans to acquire the remaining 49% interests in both Southern LNG Co. LLC (SLNG) and El Paso Elba Express Co. LLC (Elba Express) and an additional 15% interest in Southern Natural Gas Co. from El Paso Corp., Houston, (NYSE: EP) for $1.133 billion.

Pro forma, El Paso Pipeline will own 100% of SLNG and Elba Express and 60% in Southern Natural Gas.

Southern Natural Gas provides gas-transportation services in the Southeast U.S., transporting more than 3 billion cubic feet of natural gas per day during peak periods, to customers from Louisiana to South Carolina, including Georgia, Tennessee, and Florida.

Through its subsidiary Elba Express, Southern Natural Gas plans to construct a new 191-mile natural gas pipeline beginning at SNG's existing pipeline in Chatham County, Georgia, near Port Wentworth, and terminating at a point of interconnection with a natural gas pipeline owned by Transco in Anderson County, South Carolina.

Southern LNG is a subsidiary of Southern Natural Gas, which owns the Elba Island LNG terminal in Savannah, Ga. The Elba Island terminal is one of four facilities in the U.S. capable of providing domestic storage and vaporization services to international producers of LNG.

El Paso Pipeline president and chief executive Jim Yardley says, "We are excited to announce our third drop-down transaction this year, which brings our total acquisitions to more than $2.4 billion in 2010. This acquisition, which is immediately accretive to distributable cash flow, is our largest to date. It will continue our rapid growth, give us controlling interest in all of our assets, and simplify our ownership structure. These assets have a balance of stable cash flows supported by long-term contracts and growth opportunities as they are strategically located in a region that is expected to see the fastest future U.S. natural gas demand growth."

El Paso Pipeline Partners plans to fund the deal in a manner consistent with its current and target capital structure, including $415 million of cash proceeds from the partnership's September equity issuance and may include the issuance of public securities and the issuance of a promissory note to El Paso.

Management intends to recommend to the Board of Directors of the general partner a $0.03 per unit, or 7% increase in the quarterly cash distribution to $0.44 per unit, or $1.76 per unit on an annualized basis, beginning with the fourth quarter cash distribution which will be declared and paid in the first quarter 2011.

Tudor, Pickering, Holt & Co. is financial advisor to El Paso Pipeline.

The deal is expected to close by the end of November.