El Paso Pipeline Adds to SNG Stake

El Paso Pipeline Partners L.P. (EPB - Snapshot Report) said it will acquire an additional 22% interest in Southern Natural Gas Company (SNG) from El Paso Corporation (EP - Analyst Report). The partnership said it will pay roughly $587 million for the addition, which increases its ownership in SNG to 82%.

El Paso Corporation has granted El Paso Pipeline Partners a 45-day option to purchase up to an additional 3% interest in SNG. The terms of the deal were unanimously approved by the board of directors for the general partner, El Paso Pipeline GP Company L.L.C.

El Paso Pipeline Partners L.P. was formed to own and operate natural gas transportation pipelines and storage assets for El Paso Corporation. El Paso Corporation formed El Paso Pipeline Partners L.P. and owns a 49% limited partner interest and 2% general partner interest in the partnership.

El Paso Pipeline Partners L.P. also owns Wyoming Interstate Company (WIC), Southern LNG Company L.L.C. (SLNG), Elba Express Company L.L.C. (Elba Express) and a 58% interest in Colorado Interstate Gas Company (CIG).

The acquisition of additional interests in SNG enhances the partnership’s excellent distribution growth profile. SNG is strategically located in the region with the highest expected growth rate for natural gas demand in the country. The partnership’s increased stake in SNG is expected to immediately add to the partnership’s earnings.

El Paso Pipeline Partners expects to finance the deal with debt incurred under the partnership's revolving credit facility, the issuance of public securities and the issuance of a promissory note to El Paso Corporation. The partnership expects to close the deal by the end of March 2011.

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