The transaction, which also includes $467 million in debt and preferred stock, is expected to close in the third quarter of this year, subject to customary closing conditions and regulatory approvals.
Southern Star owns an interstate natural-gas pipeline spanning more than 9,600km in Kansas, Oklahoma, Missouri, Wyoming, Nebraska, Colorado, and Texas. In addition to the pipeline, the system includes 39 compressor stations and eight gas-storage fields. Southern Star’s management will continue to operate and maintain the pipeline from its Owensboro, Ky., headquarters.
New York-based AIG Highstar Capital, a private equity fund sponsored by AIG, acquired Southern Star in 2002 from Williams, and GE’s Energy Financial Services acquired 2% of the company in 2003. After the deal closes, GE’s Energy Financial Services will hold a 60% stake in Southern Star; the Canadian bank, which manages various Quebec pension plans, will hold 40%. General Electric said the purchase of Southern Star doubles its pipeline assets. “The assets fit our infrastructure portfolio strategy of generating predictable current income and return. Furthermore, we are pleased to invest alongside GE’s Energy Financial Services unit, a highly-qualified investor,” Ghislain Gauthier, a Caisse senior vice-president, said in a statement.
This is the second time GE’s energy financial services unit has invested in a pipeline with Montreal-based Caisse. Last November, GE’s energy financial services unit acquired 50% of CrossCountry Energy, a 11,800-km gas pipeline network spanning most of the region from Florida to California.