Duke Energy Income Fund Acquires Westcoast Gas Services Inc. for $145 Million

Strategic Insights -

The Duke Energy Income Fund has announced its plans to acquire Westcoast Gas Services Inc. (WGSI), a company that owns interests in four raw gas processing plants and associated gas gathering systems in British Columbia. The acquisition, which is valued at approximately $145 million, will be completed through the purchase of all issued and outstanding shares of WGSI from Westcoast Energy Inc. The fund intends to increase its monthly cash distributions to $0.07 per unit from $0.067 per unit, contingent on the closing of the acquisition.

Key Takeaways:

  • The acquisition will be completed through the purchase of all issued and outstanding shares of WGSI from Westcoast Energy Inc.
  • The value of the acquisition is approximately $145 million.
  • The fund intends to increase its monthly cash distributions to $0.07 per unit from $0.067 per unit, contingent on the closing of the acquisition.
  • The acquisition will provide the fund with an additional 47% increase in throughput capacity, up to 904 mmcf/d.
  • The acquisition is expected to be accretive to distributable cash flow.
  • Duke Energy Corporation will indirectly hold a 46.2% interest in the fund following the acquisition.
  • A special meeting of unitholders will be held in September 2006 to obtain approval of the acquisition.
  • The acquisition is expected to close by September 30, 2006.

Statistics:

  • Acquisition value: $145 million
  • Monthly cash distribution: $0.07 per unit
  • Annualized monthly cash distribution: $0.84 per unit
  • Throughput capacity: 904 mmcf/d (an increase of 47% from current levels)
  • Number of facilities: 13 (up from 9)
  • Interest in Duke Energy Corporation: 46.2% (for Duke Energy Corporation)
  • Closing date: September 30, 2006

Sources:

  • CCNMatthews via COMTEX, August 1, 2006
  • Duke Energy Income Fund news release, August 1, 2006