Kinder Morgan, announced that it has closed on the sale of a 25.5% equity interest out of its membership interest in Elba Liquefaction Company, L.L.C. (ELC) to an undisclosed financial buyer for approximately $565 million, subject to customary purchase price adjustments to reflect an economic effective date of July 1, 2022. These proceeds will reduce short-term debt and create additional capacity for attractive investments, including opportunistic share repurchases. The value of the equity interest implies an enterprise value of approximately $2.3 billion for ELC, which is approximately 13 times 2022E EBITDA. Upon closing, KMI and the undisclosed financial buyer will each hold a 25.5% interest and Blackstone Credit will continue to hold a 49% interest in ELC. Bracewell LLP served as legal advisor to KMI for this transaction. The ELC joint venture was formed in 2017 to construct and own the 10 modular liquefaction units in operation at Elba Island. KMI will continue to operate the facility.
“We are pleased to welcome a new partner into the ELC joint venture,” said KMI’s Interstate Natural Gas President Kimberly Watson. “Recent geopolitical events have proven how critical liquefied natural gas (LNG) infrastructure is to meeting global energy demand. We believe this investment further shows the value of LNG and demonstrates the important role it will play for decades to come.”
The Elba Liquefaction facility located on Elba Island in Chatham County, Georgia, is owned by ELC and includes 10 modular liquefaction units for a total capacity of approximately 2.5 million tonnes per year of LNG, which is equivalent to approximately 0.35 billion cubic feet (Bcf) per day of natural gas. ELC then delivers the LNG to Southern LNG Company, L.L.C. (SLNG) for export. KMI owns 100% of SLNG, which owns and operates the Elba Island LNG Terminal, including the LNG storage tanks and the ship dock for import and export. The facility is supported by a 20-year contract with Shell LNG NA, L.L.C., who is subscribed to 100% of the liquefaction capacity.