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Retail Supplier To Acquire Columbia Midstream Group, Notes Synergies That Will Benefit Retail Marketing Businesses

July 3, 2019

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Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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UGI Corporation announced that its subsidiary, UGI Energy Services, LLC, has signed a definitive agreement to acquire the equity interests of Columbia Midstream Group LLC, (CMG) from a subsidiary of TC Energy Corporation (TC Energy) for approximately $1.275 billion, subject to customary adjustments at closing.

CMG holds five gathering systems, with capacity of roughly 2,675,000 MMBtu/day and 240 miles of pipeline, located in the southwestern core of the Appalachian Basin.

This sale does not include any interest in Columbia Energy Ventures Company (CEVCO), which is TC Energy’s minerals business in the Appalachian basin.

"The acquisition significantly expands UGI’s midstream portfolio and provides an opportunity to invest an additional $300 - $500 million over the next five years at attractive returns. The company expects the transaction to be EPS neutral in fiscal year 2020, and accretive beginning in fiscal year 2021 excluding transaction and integration costs," UGI said

UGI noted that the transaction, "[c]reates synergies that will benefit UGI Energy Services’ midstream and retail marketing businesses as well as procurement opportunities for AmeriGas."

With respect to retail gas marketing, UGI said that the transaction, "facilitates access to local supply sourced from producers shipping on the CMG gathering assets."

UGI noted that the transaction gives UGI Energy Services access to wet gas gathering and processing

UGI Energy Services expects to fund the transaction with a combination of new debt at UGI Energy Services, a credit facility at UGI Corporation to support both this transaction and the AmeriGas Merger transaction, and available liquidity at UGI. In connection with this transaction, UGI Energy Services has secured a commitment from Credit Suisse (USA) LLC to provide a $700 million bridge facility. UGI expects consolidated pro forma leverage, for both the completion of the AmeriGas Merger transaction and the acquisition of CMG, to be between 4.3x and 4.4x at closing and approximately 3.5x by the end of 2021.

TC Energy said that it continues to own and operate a significant network of interstate pipelines in the Appalachian Basin with its Columbia Gas Transmission system

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