Enbridge Inc. (TSX/NYSE: ENB) through Enbridge (U.S.) Inc. has entered into a definitive agreement to sell Midcoast Operating, L.P. and its subsidiaries, to AL Midcoast Holdings, LLC, an affiliate of ArcLight Capital Partners, LLC, for US $1.120 billion in cash.
Midcoast conducts Enbridge’s U.S. natural gas and natural gas liquids (NGL) gathering, processing, transportation and marketing businesses, serving established basins in Texas, Oklahoma and Louisiana.
On April 27, 2017, Enbridge privatized Midcost Energy Partners (MEP) by acquiring all of the outstanding publicly-held common units of MEP for total consideration of approximately US $170 million. On June 28, 2017, Enbridge acquired all of EEP’s interest in the Midcoast gas gathering and processing business for cash consideration of US $1.3 billion plus existing indebtedness of MEP of US $953 million.
The transaction is expected to close in the third quarter of 2018, subject to receipt of customary regulatory approvals and satisfaction of other customary closing conditions.
“The sale of Midcoast is an important step in our shift towards a pure regulated pipeline and utility model, and positions us well to achieve our goal of selling CAD$3 billion in non-core assets in 2018,” said Al Monaco, President and Chief Executive Officer of Enbridge. “This transaction includes our 100-percent-owned gathering and processing assets in Texas and Oklahoma. Proceeds from the sale will be used to accelerate the strengthening of our balance sheet and enhance the financial flexibility to fund our industry leading CAD$22 billion secured growth program.”
“I’d like to thank our colleagues at Midcoast who have done an exceptional job running the business safely and reliably day-in and day-out. This sale places great people and great assets in a strong position for future growth,” added Mr. Monaco.
AL Midcoast intends to maintain Midcoast’s workforce and anticipates that they will join AL Midcoast upon transaction close. AL Midcoast intends to retain a Houston presence.
Enbridge will work with AL Midcoast to ensure a safe transition of Midcoast’s operations.
Citi acted as financial advisor and Norton Rose Fulbright US LLP acted as legal advisor to Enbridge on the transaction.