CenterPoint Energy Inc. (NYSE: CNP), OGE Energy Corp. and ArcLight Capital Partners have entered into an agreement which would allow these companies to merge a part of their operations to form a midstream company, having combined assets worth $11 billion.
According to the deal, CentrePoint Energy will provide interstate pipelines and field services to the newly formed partnership while OGE Energy Corp and Arclight will provide access to midstream business of Enogex LLC, which is jointly owned by the latter two.
While CenterPoint Energy will keep 59% stake, OGE Energy will hold 28% and ArcLight Capital Partners will retain 13% in the proposed master limited partnership (MLP), under the term of the agreement.
It is estimated that the proposed master limited partnership (MLP) will own and operate 8,400 miles of pipelines which would run across the states of Oklahoma, Texas, Arkansas and Louisiana.
The operation will be overseen by a general partner and supervised jointly CenterPoint Energy and OGE.
The concerned parties anticipate that the formation of a new joint venture will close in the second or the third quarter of the current year, subject to approvals from regulators.
In order to fund this ambitious project, the new joint venture or MLP will aim to arrange a new $1.4 billion credit line facility along with $1.05 in term loan, according to terms of agreement.
The boards of each of three companies have approved the transaction.
“The stronger financial and operational capabilities of the new partnership should allow us to realize the full potential of these assets,” said Pete Delaney, chairman and CEO of OGE, in a statement.
“We believe all of our shareholders will benefit from the creation of this partnership as a stronger competitor that we expect to be valued on a public MLP basis,” added Delaney.
The proposed MLP also plans to file for initial public offering.
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