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Blackstone to buy stake in Rover pipeline entity for $1.5bn

Published 01 August 2017

Energy Transfer Partners (ETP) has entered into an agreement to sell 32.44% stake in the entity associated with the $4.22bn Rover pipeline project to Blackstone funds for about $1.57bn.

The stake sale agreement has been signed by Energy Transfer’s wholly owned subsidiaries, Energy Transfer Interstate Holdings (ETIH) and ET Rover Pipeline (HoldCo).

Under the terms of the agreement, funds managed by Blackstone Energy Partners and Blackstone Capital Partners will acquire a 49.9% stake in HoldCo, which owns a 65% stake in Rover Pipeline.

The 1126km pipeline is being constructed by HoldCo and Rover Pipeline.

In February, Energy Transfer secured an approval from the US Federal Energy Regulatory Commission (FERC) for the construction and operation of the Rover Pipeline project.

After completion, the  pipeline will transport 3.25 billion cubic feet of natural gas per day from the Marcellus and Utica Shale production areas to markets across the US.

It will transport the gas to Union Gas Dawn Hub in Ontario, Canada for redistribution back into the US or into the Canadian market.

Following the completion of the transaction, Energy Transfer will own 50.1% stake in HoldCo, while Blackstone will hold 49.9% stake.

The transaction is expected to be completed in the fourth quarter of 2017, subject to customary closing conditions.

Energy Transfer plans to the proceeds from the sale to trim its debt and fund its current growth projects.

The company said in a statement: “The Blackstone investment will reimburse ETP for its pro rata share of the construction costs incurred by ETP through the closing date in connection with the Rover Pipeline, specified amounts of future construction costs and certain additional payments to ETP.”

Blackstone was advised by Intrepid Partners and by Morgan Stanley on the transaction.


Image: The 1126km pipeline is being constructed by HoldCo and Rover Pipeline. Photo: courtesy of supakitmod/FreeDigitalPhotos.net.