Veresen Inc (VSN.TO), a Canadian pipeline company developing the Jordan Cove liquefied natural gas facility in Oregon, said on Monday it has agreed to acquire Global Infrastructure Partners' half interest in the Ruby pipeline system for $1.43 billion.
Calgary-based Veresen will become Kinder Morgan Inc's (KMI.N) equal partner in the Ruby line, which carries as much as 1.5 billion cubic feet per day of natural gas 680 miles (1,100 km) from the Opal, Wyoming hub to the Malin hub in southern Oregon. From there the gas will travel by a new pipeline to Jordan Cove.
Veresen is acquiring Global Infrastructure's convertible preferred shares, which can be converted into common shares at its option. Kinder Morgan will remain as operator of the pipeline.
"This is a rare opportunity to acquire a large interest in a core U.S. pipeline asset," Don Althoff, Veresen's chief executive, said in a statement. Ruby is an ideal fit for Veresen ... and provides significant future added upside related to our Jordan Cove LNG project."
To pay for the project, Veresen will sell 48.8 million of subscription receipts priced at C$16.40 each to a group of underwriters led by Scotiabank that will raise about C$800 million ($730 million). Each receipt can be converted into a Veresen share once the deal closes in the fourth quarter. The remainder of cost will be funded by debt.
Veresen shares were halted on the Toronto Stock Exchange in advance of the news and ended the day at C$17.17, down 26 Canadian cents.
Veresen was advised by CIBC World Markets and Scotiabank.
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