Kinder Morgan Inc., the US natural gas pipeline giant and a shareholder in the Elba Island LNG export plant in Georgia, has sold part of its stake in the liquefaction plant.
KMI said it sold a 25.5 percent equity interest in Elba Liquefaction Company (ELC) to “an undisclosed financial buyer” for around $565 million.
After the close of the transaction the Houston, Texas-based company would own 25.5 percent of Elba Island, the same as the mystery buyer.
New York-based Blackstone Credit, a hedge fund and investment arm of the Blackstone Group, would continue to hold a 49 percent interest in ELC, which is now the majority holding.
KMI said the proceeds from the sale would reduce short-term debt and create additional capacity for “attractive investments” including “opportunistic” share repurchases.
It added that the value of the equity interest implied an enterprise value of ELC amounting to $2.3 billion, which is approximately 13 times 2022 gross earnings.
The ELC joint venture was formed in 2017 to construct and own the 10 modular liquefaction units in operation at Elba Island and KMI would continue to operate the facility.
The export plant is supported by a 20-year contract with Shell LNG North America for 100 percent of the liquefaction capacity.
Critical asset
“We are pleased to welcome a new partner into the ELC joint venture,” said KMI’s Interstate Natural Gas President Kimberly Watson.
“Recent geopolitical events have proven how critical liquefied natural gas infrastructure is to meeting global energy demand,” added Watson.
“We believe this investment further shows the value of LNG and demonstrates the important role it will play for decades to come,” she stated.
The Elba Liquefaction facility is in Chatham County in Georgia, near the city of Savannah, and produces around 2.5 million tonnes per annum of LNG from its 10 Trains using Shell processing technology.
In the operational plan, ELC then delivers the LNG to Southern LNG Co. (SLNG) for export.
KMI owns 100 percent of SLNG, which owns and operates the Elba Island LNG Terminal, including the LNG storage tanks and the ship dock for import and export.
The statement added that Bracewell LLP served as legal advisor to KMI for the transaction.
