UPDATE: EPB Reports Purchase of Nat Gas Assets from Kinder Morgan for ~$2B

El Paso Pipeline Partners, L.P. (NYSE: EPB), today announced that it willacquire from Kinder Morgan, Inc. (NYSE: KMI) KMI's 50 percent interest in RubyPipeline, 50 percent interest in Gulf LNG and 47.5 percent interest in YoungGas Storage. The transaction value is approximately $2 billion, including$1.012 billion of proportionate debt at Ruby and Gulf LNG, resulting in anequity purchase price of $972 million (consistent with EPB's budget). Thepurchase, which is expected to close in May and be effective April 30, 2014,was approved by the independent members of the board of directors of KMI, andby the conflicts committee and the board of directors of EPB's general partnerfollowing the receipt of separate fairness opinions from different investmentbanks. The company previously announced that KMI would offer to sell (dropdown) these assets to EPB.Chairman and CEO Richard D. Kinder said, “This is a win-win transaction forEPB and KMI. These assets will generate substantial, stable cash flow to EPBunitholders for many years to come, and KMI will reduce its debt outstandingand continue to participate in the cash flows from these assets through itsgeneral and limited partner interests in EPB. Market conditions continue tosupport the view that natural gas, which is domestic, clean, abundant andreasonably priced, is the future play for America's energy needs. As mentionedon our first quarter earnings call, a recent study (Wood Mackenzie) calls forU.S. natural gas demand to increase by over 30 percent in the next 10 years toapproximately 94.5 billion cubic per day (Bcf/d). EPB, which is comprisedentirely of natural gas assets, will be a significant player in helping meetthis growing demand and is well positioned for future growth.”Upon closing, this transaction will be immediately accretive to EPB, which ispurchasing the assets at approximately nine times 2013 EBITDA. EPB plans tofund 10 percent of the transaction value, net of the proportionate debt, withEPB common units that will be issued to KMI at closing valued at approximately$97.2 million. The remaining value is expected to be funded with the proceedsof one or more equity or debt issuances and/or borrowings under EPB'srevolving credit facility. KMI intends to use the proceeds from the dropdownsales to reduce debt.Ruby Pipeline is a 680-mile, 42-inch diameter pipeline system that extendsfrom Wyoming to Oregon and provides natural gas supplies from the major RockyMountain basins to consumers in California, Nevada and the Pacific Northwest.The Gulf LNG terminal, located in Pascagoula, Miss., has 6.6 Bcf/d of storagecapacity and 1.5 Bcf/d of peak vaporization send-out capacity, and isdeveloping the proposed Gulf LNG Liquefaction Project, which will addliquefaction and export capabilities at the existing terminal. Young GasStorage is located in Morgan County, Colo., and has a working natural gasstorage capacity of approximately 6 Bcf.