HOUSTON--(BUSINESS WIRE)--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.
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.