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Tallgass closes on the acquisition of a 33.3% interest in Pony Express

Published by , Editor - Hydrocarbon Engineering
World Pipelines,


Tallgrass Energy Partners, LP (TEP) has closed on the acquisition of a 33.3% interest in Tallgrass Pony Express Pipeline, LLC from a wholly-owned subsidiary of Tallgrass Development, LP, for total consideration valued at US$ 600 million.

“We are pleased to announce the completion of our second dropdown transaction at TEP. This acquisition further diversifies the operations and footprint of TEP and continues to demonstrate the execution of our growth strategy. We expect this acquisition to be immediately accretive to our unitholders, and as a result, anticipate recommending that our Board of Directors increase the next two quarterly distributions to result in an aggregate distribution increase of at least US$ 0.40 on an annualised basis,” said Tallgrass President and CEO, David G. Dehaemers, Jr.

The purchase price for Pony Express was comprised of US$ 597 million in cash and the issuance of 70 340 common units of TEP to Tallgrass Development, LP, which equates to US$ 3 million based on the Partnership’s 4 September 2014 closing price. The terms of the transaction provide TEP a minimum quarterly distribution preference payment of US$ 16.65 million through the quarter ending 30 September 2015 (pro-rated to approximately US$ 5.4 million for the quarter ending 30 September 2014) with distributions of available cash generally shared pro rata thereafter. The terms of the transaction do not require TEP to contribute any additional capital to complete the remaining initial build out of the Pony Express crude oil pipeline project; additional capital would be contributed by Tallgrass Development, LP, without dilution to the partnership’s 33.3% membership interest.


Adapted from press release by Rosalie Starling

Read the article online at: https://www.worldpipelines.com/business-news/08092014/tallgass-closes-on-the-acquisition-of-a-333-percent-interest-in-pony-express-791/

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