El Paso's pipeline project to get $700 million cash infusion

By Lisa Kerner

Charlotte, N.C., July 27 - Global Infrastructure Partners will invest up to $700 million to acquire a 50% interest in El Paso Corp.'s Ruby Pipeline project, El Paso announced on Monday.

The financing will occur in three tranches:

• $405 million in the form of a 7% secured note;

• $145 million contributed as a preferred equity interest in the Cheyenne Plains Pipeline; and

• Up to an additional $150 million as a convertible preferred equity interest in Ruby.

El Paso said Global Infrastructure Partners' convertible preferred equity interest in Ruby will earn a fixed 13% return beginning at final project completion, and Global Infrastructure Partners will have the option to convert its preferred equity to common equity at any time.

To secure Global Infrastructure Partners' investment until the Ruby project is completed, El Paso said it will put up a portion of its 55 million El Paso Pipeline Partners, LP common units and a portion of its equity in the Cheyenne pipeline.

According to El Paso, the Ruby pipeline is on schedule and expected to come in at or below its $3 billion budget.

The Ruby project is a 675-mile, 42-inch interstate natural gas pipeline that will access supply from multiple basins in the Rockies and for availability in California, Nevada and the Pacific Northwest region.

El Paso is a Houston-based natural gas transmission, exploration and production company.

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