Tallgrass Energy Partners announces potential pipeline acquisition

Tallgrass Energy Partners, LP (TEP) has announced that Tallgrass Development, LP has offered TEP the right to purchase a 33.3% interest in Tallgrass Pony Express Pipeline, LLC for total consideration of US$ 600 million. The terms of the offer provide certain cash flow preference rights that will afford TEP with first dollar preference on specified cash distributions from Pony Express through 30 September 2015.

Pony Express owns and is developing an oil pipeline project. The project consists of two components: the conversion of an approximately 430 mile natural gas pipeline and the construction of an approximately 260 mile southward pipeline extension that, when complete, will result in an oil pipeline from Guernsey, Wyoming, to Cushing, Oklahoma; and the construction of an approximately 66 mile lateral in Northeast Colorado that will interconnect with the mainline. The project is being completed in stages, with the mainline expected to be placed in service during Q3 2014, while the Northeast Colorado Lateral is expected to be in service sometime during the first half of 2015.

Tallgrass President and CEO David G. Dehaemers, Jr. said: “TEP is excited to have the opportunity to acquire an interest in Pony Express and to further diversify our operations and footprint. If the acquisition is completed we expect it to be accretive to TEP in 2014.”

The offer was received from Tallgrass Development pursuant to a right of first offer that is contained in the Omnibus Agreement that was executed between TEP and Tallgrass Development in connection with TEP’s initial public offering in May 2013. A Conflicts Committee of the Board of Directors of TEP’s general partner, consisting solely of independent directors, has been formed and will be evaluating the offer with assistance from external advisors to be engaged by the Committee. No definitive transaction agreement has been executed at this time and the proposed transaction remains subject to final review, negotiations and approval by the Conflicts Committee and by the board of directors of TEP’s general partner.

Adapted from press release by Rosalie Starling

Read the article online at: https://www.worldpipelines.com/business-news/22072014/tallgrass-energy-partners-announces-potential-pipeline-acquisition-664/