El Paso Pipeline prices $175 million private placement at average rate of 7.6%

By Kenneth Lim

Boston, Sept. 17 - El Paso Pipeline Partners, LP placed $175 million of private debt with maturities from 2011 to 2013, according to a filing with the Securities and Exchange Commission.

The company said the debt had an average annual rate of 7.6%.

The proceeds will be used to help fund the partnership's planned acquisition of an additional 30% interest in Colorado Interstate Gas Company and an additional 15% interest in Southern Natural Gas Co. from El Paso Corp. The acquisition with cost $736 million, and it will also be funded with $65 million from an existing revolving credit facility, a $10 million notes to El Paso Corp. and about 27.76 million common units of the partnership.

Settlement of both the debt and the acquisition is scheduled for Sept. 30.

Houston-based El Paso Pipeline is a Delaware limited partnership formed by El Paso Corp. to own and operate natural gas transportation pipelines and storage assets.

"We are delighted to announce the partnership's first acquisition from El Paso Corporation," El Paso Pipeline president and chief executive Jim Yardley said in a statement. "The partnership is acquiring additional interests in premier market- and supply-related pipeline assets that generate stable cash flows. This purchase improves an already excellent organic growth platform. Based solely on our current backlog of committed growth projects, we expect to achieve 8% to 10% average annual growth in distributable cash flow through 2012."

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