EIG Global Energy Partners, LLC, a private equity firm, acquired a 49% stake in Elba Liquefaction Company, L.L.C. (ELC), a company engaged in the construction of an Elba Liquefaction project, from Kinder Morgan, Inc. (KMI), an energy infrastructure company, for a purchase consideration of US$555 million (MM).
The purchase consideration consist of an upfront cash payment of approximately US$385 MM and a payment of approximately US$170 MM in excess of capital expenditures in consideration of the value created by KMI in developing the project to this stage.
The Elba Liquefaction project, a two-phased project, is under construction by ELC and Southern LNG Company, L.L.C. (SLNG). The project will add liquefaction and export capability to SLNG’s liquefied natural gas (LNG) terminal (Elba Terminal) located at Elba Island in Chatham County, Georgia, the US. ELC will own 10 liquefaction units and other ancillary equipment to be constructed. The project is expected to have a total capacity of approximately 2.5 million tonnes (350 mmcfd of gas) per year of LNG for export. The project is estimated to cost approximately US$1,300 MM, excluding capitalized interest.
Barclays Capital Inc. acted as financial advisor to Kinder Morgan in the transaction. The transaction enables EIG to strengthen its investment portfolio.
Steve Kean, president and CEO of KMI, said, “We are excited that EIG will become an equity owner in Elba Liquefaction Company as construction continues at Elba Island. The project, which began construction on November 1, 2016, is supported by a 20-year contract with Shell. As we have told the market in past months, this JV is another strategic step towards achieving our stated goals of strengthening our balance sheet and positioning the company for long-term value creation.”
Wallace Henderson, managing director of EIG, said, “This is a tremendous project that builds on our long-standing and extensive experience in LNG and LNG-related infrastructure. We are delighted to partner with Kinder Morgan and its outstanding development team to make the Elba Liquefaction Project a reality.”