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SemGroup forms JV with KKR, agrees to acquire Meritage for CAD 600mn
Posted on Friday, 11 January 2019 13:14
North American energy company SemGroup has teamed up with private equity firm KKR to launch a joint venture (JV) which will acquire Canada-based Meritage Midstream, and its midstream infrastructure assets, for CAD 600.00 million (USD 453.41 million).

Under the terms of the partnership, the former will control 51.0 per cent, with the buyout group owning 49.0 per cent of the newly-formed company to be named SemCAMS Midstream.

This transaction will create a leading Canadian midstream infrastructure platform with SemGroup contributing the shares and assets of its subsidiary in the country SemCAMS, valued at CAD 1.15 billion, in exchange for CAD 615.00 million in cash proceeds and 51.0 per cent equity interest in the JV.

KKR has agreed to pay CAD 515.00 million for 49.0 per cent of the ownership and will offer an additional CAD 300.00 million to acquire perpetual preferred equity.

In addition, the JV will enter into a CAD 800.00 million underwritten bank credit facility.

SemCAMS Midstream is in a key position for future growth opportunities, it will have 900.00 million cubic feet per day of natural gas processing capacity (MMcf/d)

Of this, Meritage contributes 195.00 MMcf/d of natural gas processing capacity, 101 miles of gas gathering pipelines, 38 miles of oil gathering pipelines and 18 miles of emulsion and gas lift pipelines in the liquids-rich Montney play.

Following completion of the products under construction, including a 200.00 MMcf/d gas processing expansion and the Wapiti Plant, total natural gas processing operational capacity will increase to 1.30 billion cf/d.

The acquisition of Meritage will be financed through a combination of funds from KKR Global Infrastructure and a fully-underwritten SemCAMS Midstream credit facility.

It is expected to close in the first quarter of 2019, following regulatory approval.

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