Crestwood Equity Partners and Consolidated Edison are to divest Stagecoach Gas Services to a subsidiary of Kinder Morgan for $1.225bn, with the cash proceeds split pro rata between Crestwood and Con Edison in line with each member’s 50% ownership interest in the joint venture.
Stagecoach is comprised of premier natural gas pipeline and storage facilities that provide a critical link between robust natural gas supply sources and northeast US demand markets.
Located in New York and Pennsylvania, Stagecoach consists of four natural gas storage facilities (Stagecoach, Thomas Corners, Steuben and Seneca Lake) with a combined storage capacity of approximately 41 bcf and three natural gas pipelines (MARC I, North/South and the Twin Tier Pipeline) with a combined throughput capacity of approximately three bcf per day.
The divestiture agreement was signed on May 31, 2021 and is subject to two closing periods. The first closing consists of the transfer of the Stagecoach subsidiaries (except for Twin Tier Pipeline) and is expected to occur following approval under Hart-Scott-Rodino, during the third quarter of 2021.
Robert G. Phillips, CEO of Crestwood’s general partner, commented, “Today’s announcement is bittersweet for Crestwood as it culminates our ownership of Stagecoach Gas Services, which our predecessor company originally acquired in 2005, but we are pleased Kinder Morgan, a great organization with complementary assets in the northeast, will be the next owner and operator of these irreplaceable infrastructure assets.”
“As of result of this transaction, Crestwood will enhance our financial flexibility by immediately accelerating our de-leveraging strategy to achieve a year-end 2021 pro forma leverage ratio of 3.50x to 3.75x, consistent with our long-term target that we have communicated to our investors over the past several years,” he continued. “As a result, we are now positioned to further reduce our cost of capital and enhance returns to our unitholders through opportunistic common and preferred unit buy-backs, as we strive to be a leading sustainable MLP with best-in-class financial metrics.”
Crestwood intends to use net proceeds to repay outstanding borrowings under its revolving credit facility and opportunistically utilize free cash flow after distributions for its board approved common and preferred equity buy-back program.
For more information visit: www.crestwoodlp.com
