RICHMOND, Va., Oct. 31, 2016 /PRNewswire/ -- Dominion
Midstream Partners, LP (NYSE: DM), and Dominion Resources, Inc.
(NYSE: D), today announced an agreement in which Dominion Midstream
will acquire Questar Pipeline, LLC, from Dominion for consideration
of approximately $1.725 billion,
including indebtedness of Questar Pipeline as part of the
transaction value. The acquisition has an anticipated effective
date of Dec. 1, 2016. The board of
directors of Dominion and the board of directors and Conflicts
Committee of Dominion Midstream GP, LLC, the general partner of
Dominion Midstream, have approved the transaction.
Dominion Midstream intends to finance the acquisition through
the following transactions:
- Dominion Midstream's assumption of Questar Pipeline's
$435 million of outstanding
indebtedness;
- Equity offerings, including:
- An underwritten public offering of Dominion Midstream common
units representing limited partner interests in the
partnership,
- Commitments received from a group of institutional investors
led by Stonepeak Infrastructure Partners for $137.5 million of common limited partner units
and up to $600 million of convertible
preferred units representing limited partner interests in the
partnership that are to be issued privately, and
- Common units and preferred units that are to be issued to
Dominion; and
- A $300 million term loan provided
by a group of banks, allowing Dominion Midstream to repay an
existing term loan currently provided by Dominion.
Upon closing, the acquisition of Questar Pipeline – which owns
and operates Federal Energy Regulatory Commission-regulated natural
gas transmission and storage assets in Colorado, Utah and Wyoming – will be immediately accretive to
Dominion Midstream's distributable cash flow and supportive of the
partnership's intention to grow distributions to unitholders at a
compounded annual growth rate of 22 percent per year. It is also
expected to more than double Dominion Midstream's existing adjusted
EBITDA, thereby obviating the partnership's need to acquire any
additional assets or issue any additional equity to meet its annual
distribution growth targets until the second half of 2018.
Subject to certain conditions, the preferred units will pay a
distribution of 4.75 percent per year for two years, and thereafter
a distribution equal to the greater of 4.75 percent per year and
the amount that the preferred units would have received if they had
converted into common limited partner units. The preferred units
will generally be convertible into common limited partner units at
a price reflecting an approximate 15 percent premium to the pricing
of this morning's underwritten public offering of common limited
partner units on a one-for-one basis after two years, at the
purchasers' option, and after three years at Dominion Midstream's
option, subject to certain conditions.
Dominion plans to use proceeds from the Questar Pipeline
dropdown into Dominion Midstream to retire outstanding debt.
Thomas F. Farrell II, chairman,
president and chief executive officer of Dominion and chairman and
CEO of Dominion Midstream, said:
"Dominion Midstream's planned acquisition of Questar Pipeline
and related financing have been anticipated as part of the
financing structure of the Dominion-Questar Corporation combination
since it was announced in February
2016. The capital generated from the Questar Pipeline
dropdown will allow Dominion to pay down debt while supporting its
earnings and dividend growth targets. The dropdown will also
provide Dominion Midstream with additional earnings to support its
best-in-class growth rate, without another asset drop or additional
equity, until the second half of 2018.
"This successful financing also validates our business plan for
Dominion Midstream, which involves accessing the capital markets to
fund the acquisition of midstream assets to support the
partnership's stated intention to grow distributions by 22 percent
per
year."
The Dominion Midstream GP's Conflicts Committee was advised by
Richards, Layton & Finger, P.A. and Evercore Group L.L.C. This
transaction is not subject to additional regulatory or other
approvals.
About Dominion
Dominion is one of the nation's largest producers and
transporters of energy, with a portfolio of approximately 26,000
megawatts of generation, 14,400 miles of natural gas transmission,
gathering and storage pipeline, and 6,500 miles of electric
transmission lines. Dominion operates one of the nation's largest
natural gas storage systems with 1 trillion cubic feet of storage
capacity and serves more than 6 million utility and retail energy
customers. For more information about Dominion, visit the company's
website at www.dom.com.
About Dominion Midstream
Dominion Midstream is a Delaware limited partnership formed by
Dominion Resources, Inc., to grow a portfolio of natural gas
terminaling, processing, storage, transportation and related
assets. It is headquartered in Richmond, Va. For more information about
Dominion Midstream, visit its website at www.dommidstream.com.
This news release includes certain "forward-looking
information." Examples include information as to expectations,
beliefs, plans, goals, objectives and future financial or other
performance or assumptions concerning matters discussed in this
release, including statements and expectations regarding future
distributions, accretion of distributable cash flow, adjusted EBITDA growth, financing needs and
plans and capital investments. These businesses are influenced
by many factors that are difficult to predict, involve
uncertainties that may materially affect actual results and are
often beyond our ability to control or estimate precisely. A
number of factors that could cause actual results to differ from
those in the forward-looking statements have been and will be
identified in the SEC Reports on Forms 10-K and 10-Q, as applicable
to Dominion and Dominion Midstream. We refer you to those
discussions for further information. Any forward-looking
statement speaks only as of the date on which it is made, and we
undertake no obligation to update any forward-looking statement to
reflect events or circumstances after the date on which it is
made.
This news release contains certain non-Generally Accepted
Accounting Principles (GAAP) financial measures, specifically
adjusted EBITDA and distributable cash flow. These non-GAAP
financial measures are provided as a supplement only and should not
be considered as an alternative to any GAAP measure of our
operating performance, liquidity or profitability. The presentation
of these financial measures is not intended to be a substitute for
or superior to any financial information prepared and presented in
accordance with GAAP. The non-GAAP financial measures included in
this news release should be reviewed in conjunction with our
financial results reported under GAAP. Please see the third-quarter
2016 Dominion Midstream earnings news release for an explanation of
adjusted EBITDA.
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SOURCE Dominion Midstream Partners; Dominion Resources