The Tres Palacios facility is a salt dome natural gas storage facility with approximately 38.4bcf of working gas capacity including 27.1bcf of current working gas capacity (Caverns 1 and 2) and 11.4bcf of incremental working gas capacity scheduled to be placed in service in the fourth quarter of 2010 (Cavern 3).
The facility is expandable by an additional 9.5bcf of working gas capacity which Inergy expects to place in service by or before 2014 (Cavern 4).
Tres Palacios is currently connected to a total of ten intrastate and interstate pipelines via a 40 mile and 24″ dual-pipe looped header system offering connectivity to multiple demand markets including the Houston and San Antonio metropolitan areas and the broader Texas markets as well as markets in the Northeast, Midwest, Southeast, Mid-Atlantic US and Mexico.
Approximately 90% of the existing storage capacity at Tres Palacios is under firm storage contracts, and Inergy expects to enter into such contracts for the capacity scheduled to be placed into service in the fourth quarter.
To fund the acquisition, the company has secured a commitment letter for an underwritten $700m bridge financing from Wells Fargo, Barclays Capital and JP Morgan.
The remaining consideration and transaction fees and expenses will be initially funded by borrowings on Inergy’s existing $525m secured credit facilities.
