Agreement strengthens relationship between
Kinder Morgan and recently expanded Southern Company; Positions
both companies for long-term growth
Southern Company (NYSE:SO) and Kinder Morgan, Inc. (NYSE: KMI)
today announced a natural gas pipeline venture designed to advance
both companies' leadership in energy infrastructure development
through Southern Company’s acquisition of a 50 percent equity
interest in the Southern Natural Gas (SNG) pipeline system. Kinder
Morgan will continue to operate the system. In addition, the
agreement commits the companies to cooperatively pursue specific
growth opportunities to develop natural gas infrastructure for the
strategic venture.
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SNG is a 7,600-mile pipeline system connecting natural gas
supply basins in Texas, Louisiana, Mississippi, Alabama and the
Gulf of Mexico to markets in Louisiana, Mississippi, Alabama,
Florida, Georgia, South Carolina and Tennessee. SNG is a principal
transporter of natural gas to Alabama, Georgia and South Carolina,
which are part of one of the fastest-growing natural gas demand
regions in the United States.
Southern Company, one of the nation’s largest natural gas
consumers and distributors, and Kinder Morgan, a recognized leader
in natural gas pipeline development and operations, will work
together to advance both companies’ efforts to develop
infrastructure important to America’s energy future.
“This transaction is consistent with the infrastructure
development strategy we have discussed for well over a year. The
company’s strategic venture with Kinder Morgan, combined with our
recent additions, AGL Resources and PowerSecure, underscore
Southern Company’s leadership position in electricity and natural
gas and our commitment to developing America’s energy
infrastructure,” said Southern Company Chairman, President and CEO
Thomas A. Fanning. “Our new ownership stake in SNG will position
Southern Company for future growth opportunities and enhanced
access to natural gas, which are expected to benefit customers and
investors alike.”
“Southern Company has been a valued customer of SNG for many
years and this agreement draws on the strengths of both companies,”
said Norman G. Holmes, president of Kinder Morgan South Region
Pipelines. “We are very pleased to deepen our relationship with
them and excited about the growth opportunities this strategic
relationship will provide.”
Steve Kean, Kinder Morgan president and chief executive officer,
added, “We plan to use all of the proceeds from this transaction to
reduce debt at KMI. This is another step towards achieving our
stated goals of strengthening our balance sheet and positioning the
company for long-term value creation.”
Inclusive of existing SNG debt, the transaction equates to an
SNG total enterprise value of approximately $4.15 billion which
implies a value of $1.47 billion for Southern Company’s 50 percent
share of the equity interest. Southern Company expects to finance
the initial purchase, as well as any related future growth
opportunities in a credit-supportive manner.
The transaction is subject to the notification and clearance and
reporting requirements under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976. The companies expect to complete the
transaction in the third quarter or early in the fourth quarter of
2016.
Jones Day, Gibson Dunn & Crutcher LLP, Troutman Sanders LLP
and Balch & Bingham LLP are serving as legal counsel to
Southern Company, and Bracewell LLP and Weil, Gotshal & Manges
LLP are serving as legal counsel to Kinder Morgan.
About Kinder Morgan
Kinder Morgan, Inc. (NYSE: KMI) is the largest energy
infrastructure company in North America. It owns an interest in or
operates approximately 84,000 miles of pipelines and
approximately 180 terminals. The company’s pipelines transport
natural gas, gasoline, crude oil, CO2 and other products, and its
terminals store petroleum products and chemicals, and handle bulk
materials like coal and petroleum coke. For more information please
visit www.kindermorgan.com.
About Southern Company
Southern Company (NYSE: SO) is America's premier energy company,
with 44,000 megawatts of generating capacity and 1,500 billion
cubic feet of combined natural gas consumption and throughput
volume serving 9 million electric and gas utility customers through
its subsidiaries. The company provides clean, safe, reliable and
affordable energy through electric utilities in four states,
natural gas distribution utilities in seven states, a competitive
generation company serving wholesale customers across America and a
nationally recognized provider of customized energy solutions, as
well as fiber optics and wireless communications. Southern Company
brands are known for excellent customer service, high reliability
and affordable prices that are below the national average. Through
an industry-leading commitment to innovation, Southern Company and
its subsidiaries are inventing America's energy future by
developing the full portfolio of energy resources, including
carbon-free nuclear, 21st century coal, natural gas, renewables and
energy efficiency, and creating new products and services for the
benefit of customers. Southern Company has been named by the U.S.
Department of Defense and G.I. Jobs magazine as a top military
employer, recognized among the Top 50 Companies for Diversity by
DiversityInc, listed by Black Enterprise magazine as one of the 40
Best Companies for Diversity and designated a Top Employer for
Hispanics by Hispanic Network. The company has earned a National
Award of Nuclear Science and History from the National Atomic
Museum Foundation for its leadership and commitment to nuclear
development and is continually ranked among the top utilities in
Fortune's annual World's Most Admired Electric and Gas Utility
rankings. Visit our website at www.southerncompany.com.
Cautionary Statements Regarding Forward-Looking
Information
This release contains forward-looking statements which are made
pursuant to safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements
include statements, among other things, concerning the expected
benefits of the transaction, including future growth opportunities,
financing plans for the transaction and the expected timing of the
completion of the transaction. These forward-looking statements are
often characterized by the use of words such as “expect,”
“anticipate,” “plan,” “believe,” “may,” “should,” “will,” “could,”
“continue”, “opportunity” and the negative or plural of these words
and other comparable terminology. Although Southern Company and
Kinder Morgan believe that the expectations reflected in such
forward-looking statements are reasonable, such statements involve
risks and uncertainties and undue reliance should not be placed on
such statements. Certain material factors or assumptions are
applied in making forward-looking statements. Actual results may
differ materially from those expressed or implied in such
statements. Important factors that could cause actual results to
differ materially from these expectations include, among other
things, the following: the failure to receive, on a timely basis or
otherwise, the required approvals by government or regulatory
agencies (including the terms of such approvals); the possibility
that long-term financing for the transaction may not be put in
place prior to the closing; the risk that a condition to closing of
the transaction may not be satisfied; the possibility that the
anticipated benefits from the transaction cannot be fully realized
or may take longer to realize than expected; the diversion of
management time on transaction-related issues; the impact of
legislative, regulatory and competitive changes; and other risk
factors relating to the energy industry, as detailed from time to
time in each of Southern Company’s and Kinder Morgan’s reports
filed with the Securities and Exchange Commission. There can be no
assurance that the transaction will in fact be consummated.
Additional information about these factors and about the
material factors or assumptions underlying such forward-looking
statements may be found under Item 1.A. in Southern Company’s and
Kinder Morgan’s Annual Reports on Form 10-K for the fiscal year
ended December 31, 2015. The foregoing list of important factors
that may affect future results is not exhaustive. When relying on
forward-looking statements to make decisions, investors and others
should carefully consider the foregoing factors and other
uncertainties and potential events. All subsequent written and oral
forward-looking statements concerning the transaction or other
matters attributable to Southern Company, Kinder Morgan or any
other person acting on their behalf are expressly qualified in
their entirety by the cautionary statements referenced above. The
forward-looking statements contained herein speak only as of the
date of this release. Neither Southern Company nor Kinder Morgan
undertakes any obligation to update or revise any forward-looking
statement, except as may be required by law.
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Kinder MorganMedia
RelationsRichard Wheatley,
713-420-6828Richard_wheatley@kindermorgan.comInvestor
Relations713-369-9490km_ir@kindermorgan.comwww.kindermorgan.comorSouthern
CompanyMedia Relations404-506-5333 or
866-506-5333www.southerncompany.comInvestor RelationsAaron
Abramovitz, 404-506-0780apabramo@southernco.com
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