AEP sells Louisiana Intrastate Gas Pipeline assets as part of plan to divest non-core holdings

abarrelfullabarrelfull wrote on 05 May 2015 07:45

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Feb. 17, 2004 - American Electric Power (NYSE: AEP) today announced that it has signed a definitive agreement to sell LIG Pipeline Co. and its subsidiaries - LIG Inc., Louisiana Intrastate Gas Company L.L.C., LIG Chemical Co., LIG Liquids Company L.L.C. and Tuscaloosa Pipeline Co. - to Crosstex Energy L.P. for $76.2 million.
Proceeds from the sale, part of AEP´s plan to divest non-core assets and focus on core utility operations, will be used to reduce debt and strengthen the balance sheet.

The sale includes LIG´s approximately 2,000 miles of natural gas gathering and transmission pipelines and five gas processing facilities that straddle the system.

Not included in the transaction is Jefferson Island Storage and Hub L.L.C., which was acquired with the LIG assets by AEP but will be sold separately. Jefferson Island Storage and Hub consists of two salt dome gas storage caverns, with approximately 9 million MMBtu of storage capacity, and two 16-inch header pipelines. The high deliverability system has eight interconnections, including LIG and Henry Hub via Sabine Pipeline. Jefferson Island Storage and Hub is also directly connected to Texas Gas Transmission, Columbia Gulf Transmission, Sea Robin Pipeline, Tennessee Gas Pipeline, Gulf South Pipeline and NGPL.

"We´ve committed to divest assets that don´t fit with the core of our long-term strategy," said Michael G. Morris, AEP president and chief executive officer. "The sale of LIG is an important step toward the completion of this plan.

"We recognized early in this process that selling the Jefferson Island assets separate from the pipeline would bring greater value," Morris said. "We expect that transaction to be completed before mid year."

Closing, which is subject to completion of certain conditions by AEP and Crosstex, is expected within 90 days. Regulatory approvals required include federal clearance pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, approval from the Louisiana Public Service Commission and completion of various other regulatory filings.

AEP acquired the LIG and Jefferson Island assets on Dec. 2, 1998 from Equitable Resources for $320 million. The company has recorded impairments to the combined assets (LIG and Jefferson Island), which reduced the value of the assets on AEP’s books to $169 million as of Dec. 31, 2003. The sales price for LIG, minus Jefferson Island, approximates the current book value and is not expected to have a material impact on 2004 GAAP earnings.

AEP classified the combined LIG assets as a discontinued operation held for sale during the fourth quarter of 2003.

AEP continues its work to divest its operations in the United Kingdom, also classified as discontinued during the fourth quarter.

"We expect the UK assets to be sold toward the end of the year, although we will complete the transaction as soon as possible," Morris said. "We also continue work to shed other smaller non-core investments. These transactions will eliminate assets that have masked the continued strong earnings of our utility operations and move us closer to the performance and stability valued by investors."

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