GE Commercial Finance Energy Financial Services, a global energy investor, and Caisse de depot et placement du Quebec agreed to buy the Southern Star gas pipeline system from AIG Highstar Capital. The sale is subject to customary closing and regulatory approvals, expected within the third quarter of this year.
Southern Star is a regulated interstate natural gas pipeline spanning more than 6,000 miles in Kansas, Oklahoma, Missouri, Wyoming, Nebraska, Colorado and Texas. Along with 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, and Kansas City and Wichita in Kansas.
GE's Energy Financial Services unit will hold a 60 percent economic interest in Southern Star, while Caisse de depot et placement du Quebec will hold 40 percent. Southern Star's management will continue to operate and maintain the pipeline from its Owensboro, Ky., headquarters. The deal doubles GE's pipeline assets.
"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," said Dan Castagnola, managing director at GE Commercial Finance Energy Financial Services.
The deal marks the second time GE's Energy Financial Services unit has invested in a pipeline with Caisse de depot et placement du Quebec. Last November, GE's Energy Financial Services unit acquired 50 percent of CrossCountry Energy, a 7,400-mile gas pipeline network spanning most of the region from Florida to California.
GE Commercial Finance Energy Financial Services, based in Stamford, invests about $3 billion annually in energy. Shares of GE traded Monday morning on the New York Stock Exchange at $35.18, up 19 cents. The stock has traded between $31.42 and $37.75 over the past year.
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