The El Paso acquisition is expected to be nicely accretive to KMI. As a result of this transaction and KMI’s normal expected annual growth, KMI expects its dividend per share to grow at an average annual rate of around 12.5 percent through 2015 from its budgeted 2011 dividend per share of $1.16. “We plan to update our financial guidance to include the impact of the El Paso transaction at some point around the close,” Kinder said.
Tentative Election Deadline
A tentative deadline for El Paso shareholders to elect the form of consideration that they wish to receive has been set for 5:00 p.m., New York City time, on May 23, 2012. The election deadline may be extended. Subject to regulatory approval, the close of the merger is expected to occur by the end of May.
Tentative Federal Trade Commission Agreement
KMI reached an agreement with Federal Trade Commission (FTC) staff to divest certain KMP assets as a necessary step in order to receive regulatory approval of the transaction. Subject to final FTC management and Commission approval, KMI has agreed to sell Kinder Morgan Interstate Gas Transmission, Trailblazer Pipeline Company, its Casper-Douglas natural gas processing and West Frenchie Draw treating facilities in Wyoming, and the company’s 50 percent interest in the Rockies Express Pipeline.
As previously announced, KMI plans to offer (drop down) El Paso assets to KMP to replace the divested assets. The company expects to drop down all of Tennessee Gas Pipeline and a portion of El Paso Natural Gas contemporaneously with the close of KMP’s divestitures, which are expected to occur in the third quarter this year. It is expected that the combination of the divestitures and the dropdowns will be neutral to KMP’s distribution per unit in 2012 and accretive thereafter. El Paso has offered to sell the remaining 14 percent of Colorado Interstate Gas and all of Cheyenne Plains Pipeline to El Paso Pipeline Partners, L.P. (NYSE: EPB). Subject to the approval of the boards of directors of El Paso and EPB, this dropdown transaction is expected to close contemporaneously with the close of the KMI-EP transaction and is expected to be immediately accretive to EPB’s distributable cash flow.