HOUSTON–(BUSINESS WIRE)–American Midstream Partners, LP (NYSE: AMID) (“AMID” or “Partnership”) announced today the acquisition and closing of 100% of the equity interests in Trans-Union Interstate Pipeline, L.P. (“Trans-Union”) from affiliates of ArcLight Capital Partners, LLC (“ArcLight”), which controls the general partner of the Partnership, for a total consideration of approximately $48 million. The consideration consisted of approximately $15.5 million cash funded from borrowings under the Partnership’s revolving credit facility and the assumption of $32.5 million of non-recourse debt.
Trans-Union owns a 42-mile, 30-inch diameter high-pressure FERC-regulated natural gas interstate pipeline with 546,000 MMbtu/day of maximum capacity. Trans-Union delivers natural gas transmission from Sharon, Louisiana to customers in El Dorado, Arkansas and is anchored by 15-year take-or-pay agreements with approximately 91% of FERC regulated capacity with investment grade utilities. Trans-Union primarily delivers natural gas to the Union Power Station, owned by Entergy Arkansas, Inc., Entergy Louisiana, LLC, and Entergy New Orleans, Inc., as well as to a recently expanded fertilizer plant owned by El Dorado Chemical Company, a subsidiary of LSB Industries.
The purchase of Trans-Union is immediately accretive to Adjusted EBITDA and distributable cash flow and is complementary to AMID’s existing natural gas transmission assets within the Southeastern U.S. with proximity to AMID’s Midla system. The transaction offers additional acquisition opportunities to continue building its natural gas infrastructure assets to satisfy fast growing Southeastern U.S. demand. This transaction is part of the Partnership’s strategic capital reallocation strategy that is refocusing capital to core assets at accretive multiples.
A conflicts committee of the board of directors of the general partner of the Partnership composed of independent directors, as well as the full board of directors of the general partner, unanimously approved the transaction. This committee was advised by Thompson & Knight LLP as to legal matters.
Southern Natural Gas Interconnect
Additionally, the Partnership announced the completion of a new pipeline connection and commencement of deliveries into its AlaTenn pipeline system with Southern Natural Gas (“SNG”) in Alabama. The new SNG interconnect allows AlaTenn to participate in movement of Northeast Marcellus natural gas supply into Southeast U.S. demand markets. The interconnect materially increases AlaTenn’s utilization via a 30% increase on AlaTenn’s contracted capacity.
“We are pleased with AMID’s ongoing growth and participation in natural gas infrastructure in the Southeast U.S. market,” stated Lynn Bourdon III, President and Chief Executive Officer of the Partnership. “The Trans-Union drop down further demonstrates AMID’s beneficial relationship with ArcLight and increases our ability to expand natural gas infrastructure density. Further, the SNG interconnect expands AlaTenn’s market connectivity and increases pipeline utilization with FERC regulated volumes. Combined, these transactions anchor the Partnership as a leading provider in the rapidly growing Southeastern U.S. natural gas transmission market.”
About American Midstream Partners, LP
American Midstream Partners, LP is a growth-oriented limited partnership formed to provide critical midstream infrastructure that links producers of natural gas, crude oil, NGLs, condensate and specialty chemicals to end-use markets. American Midstream’s assets are strategically located in some of the most prolific onshore and offshore basins in the Permian, Eagle Ford, East Texas, Bakken and Gulf Coast. American Midstream owns or has an ownership interest in approximately 4,000 miles of interstate and intrastate pipelines, as well as ownership in gas processing plants, fractionation facilities, an offshore semisubmersible floating production system with nameplate processing capacity of 100,000 Bbl/d of crude oil and 240 MMcf/d of natural gas; and terminal sites with approximately 6.7 million Bbls of storage capacity. For more information about American Midstream Partners, LP, visit www.americanmidstream.com.
About ArcLight Capital Partners, LLC
ArcLight is one of the leading private equity firms focused on energy infrastructure investments. Founded in 2001, the firm helped pioneer an asset-based private equity approach to investing in the dynamic energy sector. ArcLight has invested approximately $19 billion in over 100 transactions since inception. Based in Boston, the firm’s investment team employs a hands-on value creation strategy that utilizes its in-house technical, operational, and commercial specialists as well as the firm’s 850-person asset management affiliate. More information about ArcLight, and a complete list of ArcLight’s portfolio companies, can be found at www.arclightcapital.com.