NiSource announces plans to separate its two pipeline businesses

NiSource Inc. has announced that its Board of Directors has approved, in principle, plans to separate its natural gas pipeline and related businesses into a stand-alone publicly traded company. The transaction will result in two highly focused energy infrastructure companies: NiSource Inc., a fully regulated natural gas and electric utilities company, and Columbia Pipeline Group Inc. (CPG), a pure-play natural gas pipeline, midstream and storage company. The separation is expected to occur in mid-2015.

"Separating our regulated utilities and pipeline businesses is a significant and logical step in our proven long-term strategy that has delivered substantial value to investors and enhanced service for our customers," NiSource President and CEO Robert C. Skaggs Jr. said. "As independent, highly focused, premier entities, both companies will benefit from the size and scale of their distinct assets and customer bases, will have enhanced strategic clarity and focus, and will be well capitalised, all enhancing their ability to successfully execute on their robust, long-term investment plans.

"By creating two dynamic companies that can execute on their distinct business strategies, we expect to further sharpen each company's customer service focus, maintain strong levels of local employment and community involvement, thereby further positioning us to create immediate and long-term value for our shareholders," said Skaggs.

Under the separation plan, NiSource shareholders would retain their current shares of NiSource stock and receive a pro-rata dividend of shares of CPG stock in a transaction that is expected to be tax-free to NiSource and its shareholders. The actual number of CPG shares that would be distributed to NiSource shareholders will be determined prior to closing, which is expected to take place in mid-2015.

Columbia Pipeline Group to feature strategic assets, US$ 12 - 15 billion investment opportunity

CPG will include Columbia Gas Transmission, Columbia Gulf Transmission, NiSource Midstream Services, and other current NiSource natural gas pipeline, storage and midstream holdings. In total, at separation the new public company will operate more than 15 000 miles of natural gas transmission pipelines, nearly 300 billion ft³ of underground natural gas storage capacity, and a growing portfolio of midstream and related facilities.

The CPG system provides access to energy markets from the US Southeast through the Northeast, as well as strategic asset positions throughout the Marcellus and Utica Shale production regions. The company has leveraged these assets to develop a deep inventory of supply and market-driven growth projects, many of which are in advanced stages of development. These projects, when paired with the company's long-term system modernisation programme, represent a potential capital investment opportunity of US$ 12 - 15 billion over the next 10 years, positioning the company to provide enhanced earnings and dividend growth driven by its projected net investment growth.

"As an independent company, CPG will be well-positioned to execute on a significant number of value-creating growth opportunities resulting from the expansion of natural gas drilling in its geographic territories, its landmark system modernisation programme as well as increased demand associated with liquefied natural gas exports and gas-fired electric generation – all of which is expected to benefit our customers, investors and other key stakeholders," Skaggs said. "We are committed to unlocking significant value and enabling even greater investment to fuel growth in the CPG business that would not have been possible without the CPG separation and associated MLP."

CPG financing expected to include capital raised by Master Limited Partnership

CPG anticipates that it will finance its capital investment plan through a combination of debt and equity. That financing is also expected to include capital raised by CPG's Master Limited Partnership, the proposed initial public offering of which was announced in a separate news release issued today.

NiSource to remain one of nation's largest natural gas and electric utility companies

Upon completion of the planned separation, NiSource will remain one of the largest natural gas utility companies in the United States, serving more than 3.4 million customers in seven states under the Columbia Gas and NIPSCO brands. The company also will continue to provide electric distribution, generation and transmission services for approximately 450 000 NIPSCO electric customers in northern Indiana.

NiSource is expected to be well-positioned to provide stable long-term earnings and dividend growth of 4 – 6% percent annually following the planned separation. The company's growth profile is supported by stable revenue streams, contemporary rate designs and an inventory of approximately US$ 30 billion in infrastructure investment opportunities spanning the next 20-plus years.

"As a pure-play utilities company, we expect NiSource will continue to be well capitalised, with significant customer and rate base scale, and a deep inventory of infrastructure investment opportunities," Skaggs said. "The company's strong foundation, supported by a proven track record of execution on core system enhancement, regulatory and legislative programmes, should enable NiSource to continue delivering safe, reliable and efficient service to its customers, as well as sustainable growing value to shareholders."

Adapted from press release by Rosalie Starling

Read the article online at: https://www.worldpipelines.com/business-news/03102014/nisource-announces-plans-to-separate-its-two-pipeline-businesses-877/