With this acquisition, the company will enter into the natural gas liquids market with well-run and strategically-located assets.
The joint venture is expected to fund this acquisition with proceeds from a $225m, 5-year bank loan and equity contributions from Boardwalk and an affiliate of its general partner, Boardwalk Pipelines Holding Corp. (BPHC), a wholly-owned subsidiary of Loews Corporation.
Boardwalk president and CEO Stan Horton said the PL Midstream acquisition supports the firm’s long-term growth strategy of diversifying into industries that complement its core natural gas pipeline and storage businesses.
"We are pleased to expand into a business with similar operational and financial characteristics to our core businesses, yet a different commodity market environment," Horton added.
BPHC will own 67% of the joint venture’s equity, while remaining 33% will be owned by Boardwalk. They are likely to contribute about $268m and $132m, respectively, to fund the acquisition.
The deal is expected to close in late September or early October, subject to customary closing conditions, including expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.
Barclays has acted as exclusive financial advisor to Boardwalk, while Wells Fargo Securities acted as exclusive financial advisor to PL Midstream on this transaction.
PL Midstream provides salt-dome storage, pipeline transportation, fractionation and brine supply services for producers and consumers of petrochemicals, natural gas liquids (NGLs) and natural gas through two hubs in southern Louisiana, the Choctaw Hub in the Mississippi River Corridor and the Sulphur Hub in the Lake Charles area.
