American International Group has agreed to sell the Southern Star Central Corporation gas pipeline system to GE Commercial Finance and its partner Caisse de depot et placement du Quebec.
AIG will sell the pipeline assets through its private equity fund Highstar Capital to GE’s Commercial Finance Energy Financial Services division, a major global energy investor, and Caisse, Canada’s largest institutional investor. The purchase price is $362 million, plus the assumption of $476 million in debt and preferred stock. Completion is scheduled for the third quarter of this year.
Southern Star is a regulated company that owns an interstate natural gas pipeline spanning more than 6,000 miles in Kansas, Oklahoma, Missouri, Wyoming, Nebraska, Colorado and Texas.
In addition to the pipeline, the system includes 39 compressor stations and eight gas storage fields. Customers include local gas distribution companies in Kansas City, St. Louis and Springfield in Missouri, as well as Kansas City and Wichita in Kansas.
Upon closing, GE’s Energy Financial Services will hold a 60% economic interest in Southern Star. Caisse de depot et placement du Quebec will hold 40%. Meanwhile, Southern Star’s management will continue to operate and maintain the pipeline from its Owensboro, Kentucky, headquarters.
Our acquisition of Southern Star nearly doubles our pipeline assets and reinforces our infrastructure growth strategy, said Dan Castagnola, managing director at GE’s Energy Financial Services. Southern Star’s competitive position in the US gas market, along with its stable earnings and cash flows, make it a valuable addition to our portfolio.
The purchase from AIG represents the second deal forged by the GE/Caisse alliance. The two companies teamed up last year to buy CrossCountry Energy, a gas pipeline network between Florida and California.