Kinder Morgan (KMI) Issues Notes to Fund Pipeline Merger

Zacks Equity Research
0

Houston, TX-based oil and gas pipeline company, Kinder Morgan, Inc. (KMI) has sold $6 billion of senior notes. According to data compiled by Bloomberg on this matter, $1.75 billion carry a coupon rate of 5.55%, and two separate blocks of $1.5 billion worth of notes carry a coupon rate of 4.3% and 3.05%. The company also issued securities worth $750 million with coupon rate of 5.3% and $500 million with coupon rate of 2%.

The proceeds from the transaction would be used to finance the cash portion of the merger consideration for Kinder Morgan Energy Partners, L.P. (KMP) and El Paso Pipeline Partners, L.P (EPB), and for its related fees cum expenses. The notes’ issuance has been assigned a credit rating of 'BBB-' by Fitch Ratings.

On Aug 10, 2014, the company announced that it will acquire all of the outstanding equity securities of KMP; Kinder Morgan Management, LLC (KMR); and El Paso Pipeline Partners in a transaction valued at over $71 billion.

The combined entity, once operational, will represent the largest energy infrastructure company in North America and the third-largest energy company globally. It is estimated to have an enterprise value of about $140 billion. The transaction is expected to close on Nov 26, 2014.

Further, the acquisition will simplify the structure of the Kinder Morgan group of companies, benefiting all shareholders and unitholders. Kinder Morgan is projected to return a dividend of $2.00 per share in 2015, up 16% from the estimated $1.72 in 2014. Management expects the dividend to increase by about 10% each year from 2015 through 2020. Over the same period, excess coverage is anticipated to exceed $2 billion.

The transaction will provide KMI shareholders with significant tax benefits from depreciation deductions related to the upfront purchase and future capital expenditures.

Additionally, the company will have a leading position in each of its business segments, and operate in the swiftly growing North American energy infrastructure sector. The company operates approximately 80,000 miles of pipelines transmitting natural gas, refined petroleum products, crude oil, carbon dioxide and additional products. It has more than 180 terminals that store petroleum products and chemicals, along with ethanol, coal, petroleum coke and steel.

Currently, Kinder Morgan carries a Zacks Rank #3 (Hold).

Read the Full Research Report on KMP
Read the Full Research Report on EPB
Read the Full Research Report on KMI
Read the Full Research Report on KMR


Zacks Investment Research

Advertisement

Recommended Stories

  • Dow Jones Falls As Donald Trump Stock Craters; Cathie Wood Buys This Stock Amid 51% Plunge

    The Dow Jones fell as Elon Musk made a Tesla move. The Donald Trump stock sank on the stock market today. Cathie Wood bought a diving stock.

  • Stock Selloff Spreads as Middle East Tension Rises: Markets Wrap

    (Bloomberg) -- European stocks tumbled, following a selloff in Asia and on Wall Street that was sparked by angst over elevated US interest rates and fueled by signs of fading momentum in China’s economy and rising tensions in the Middle East.Most Read from BloombergBeyond the Ivies: Surprise Winners in the List of Colleges With the Highest ROITrump Media’s $5.3 Billion Selloff Deepens as 270% Rally FizzlesS&P 500 Breaks Below 5,100 as Big Tech Sells Off: Markets WrapIran’s Attack on Israel Spark

  • Trump Media stock tanks on move to issue millions of shares

    Trump Media stock slid as much as 16% on Monday after the parent company of Donald Trump's social media platform, Truth Social, filed to issue more than 21 million shares.

  • Nvidia Reveals 8 'Secrets' For When To Sell Stocks. No. 2 Is Key.

    As top growth stocks like Nvidia test key moving averages, keep in mind these proven rules for when to sell stocks.

  • 4 Oversold Stocks to Buy Right Now

    Here are four stocks to buy now that could offer investors upside in the short and long term.

  • Elon Musk Agrees With Jamie Dimon's Warning Of Political Polarization 'Creating Risks That Could Eclipse Anything Since World War II'

    JP Morgan Chase & Co. (NYSE:JPM) CEO Jamie Dimon's annual shareholder letter is a moment investors await to understand the thinking of one of the world's most influential bankers. While there has been speculation of Dimon entering politics, with him even gaining the support of billionaire hedge fund manager Bill Ackman to run for president, JP Morgan shared in a statement that "Jamie has no plans to run for office" and that "he is very happy in his current role." That has not stopped him from oc

  • Tesla layoffs hit high performers, some departments slashed, sources say

    Tesla management told employees Monday that the recent layoffs -- which gutted some departments by 20% and even hit high performers -- were largely due to poor financial performance, a source familiar with the matter told TechCrunch. The layoffs were announced to staff just a week before Tesla is scheduled to report its first-quarter earnings. The move comes as Tesla has seen its profit margin narrow over the past several quarters, the result of an EV price war that has persisted for at least a year.

  • Dow Jones Futures: Another Ugly Market Reversal; Nvidia Skids, Tesla Tumbles On 'Dark Day'

    Mideast fears and surging yields triggered another ugly market reversal. Nvidia and Microsoft fell while Tesla dived.

  • Bitcoin Halving May Lead to Some Sales, Crypto.com CEO Says

    (Bloomberg) -- Bitcoin selling may become evident as the date of the so-called halving nears but the event is set to bolster the price of the largest digital asset longer term, according to the head of the Crypto.com exchange.Most Read from BloombergBeyond the Ivies: Surprise Winners in the List of Colleges With the Highest ROITrump Media’s $5.3 Billion Selloff Deepens as 270% Rally FizzlesS&P 500 Breaks Below 5,100 as Big Tech Sells Off: Markets WrapIran’s Attack on Israel Sparks Race to Avert

  • BlackRock’s Kapito Says Stocks Are Primed for a Comeback

    (Bloomberg) -- BlackRock Inc.’s Robert Kapito says the stock market is poised to benefit as investors deploy their outsized holdings of cash.Most Read from BloombergBeyond the Ivies: Surprise Winners in the List of Colleges With the Highest ROITrump Media’s $5.3 Billion Selloff Deepens as 270% Rally FizzlesS&P 500 Breaks Below 5,100 as Big Tech Sells Off: Markets WrapIran’s Attack on Israel Sparks Race to Avert a Full-Blown WarApple Faces Worst iPhone Slump Since Covid as Rivals RiseThere’s almo