Summary
Kinder Morgan, Inc. (KMI) filed an 8-K on August 14, 2012, reporting on two significant events. The primary event detailed is the completion of a "Drop-Down Transaction" where Kinder Morgan Energy Partners, L.P. (KMP), a subsidiary of KMI, acquired substantial natural gas pipeline assets from KMI's other subsidiaries for approximately $6.22 billion. This transaction involved the acquisition of 100% of Tennessee Gas Pipeline Company, L.L.C. (TGPC) and 50% of El Paso Natural Gas Company (EPNG), which together represent extensive pipeline networks serving critical regions in the U.S. Additionally, the filing reports on a sale of 58,000,000 shares of Class P common stock by selling stockholders, raising approximately $2,001.6 million. Importantly, KMI itself did not sell any shares and did not receive proceeds from this offering. This sale led to a reduction in the board representation for certain investment firms, namely The Carlyle Group, Riverstone Holdings LLC, and Goldman, Sachs & Co., as their ownership stakes fell below thresholds triggering director appointment rights.
Key Highlights
- 1Kinder Morgan Energy Partners, L.P. acquired TGPC and 50% of EPNG for approximately $6.22 billion.
- 2The "Drop-Down Transaction" effectively transferred significant natural gas pipeline assets to KMP.
- 3KMI's selling stockholders sold 58,000,000 shares of Class P common stock, generating about $2,001.6 million in proceeds for the sellers.
- 4KMI did not sell any shares and received no proceeds from the stock offering by selling stockholders.
- 5The sale of shares by certain investors resulted in the resignation of their representatives from KMI's Board of Directors.
- 6The board size was reduced and specific supermajority voting provisions for the board are no longer in effect.