(NextEra Energy Partners, 28.Dec.2023) — NextEra Energy Partners, LP (NYSE: NEP) closed on its previously disclosed agreement with Kinder Morgan, Inc. (NYSE: KMI) to sell its Texas natural gas pipeline portfolio for $1.815bn.
“The completion of this sale is an important step in NextEra’s transition plans,” said John Ketchum, chairman and chief executive officer.
“With the Texas natural gas pipeline portfolio sale complete, the partnership has sufficient proceeds available to address the equity buyouts of the STX Midstream and NEP Renewables II convertible equity portfolio financings,” Ketchum said.
The Texas natural gas pipeline portfolio is primarily comprised of seven pipelines, which provide natural gas to Mexico and power producers and municipalities in South Texas. The total 2023 calendar-year adjusted EBITDA for the Texas natural gas pipeline portfolio is expected to be approximately $180mn, with roughly 70% associated with the transmission portion of the portfolio and the remaining 30% associated with the midstream pipelines. The sale price represented an approximate 10 times multiple on the estimated calendar-year 2023 adjusted EBITDA.
Upon receiving Hart-Scott-Rodino antitrust approval and meeting all remaining closing conditions, NextEra Energy Partners received net proceeds of $1.4bn, after extinguishing project-related debt and associated interest rate swaps of approximately $430mn. With the STX Midstream convertible equity portfolio financing already paid off, NextEra expects to use the remaining net proceeds to complete the NEP Renewables II buyouts on their stated minimum buyout dates of Jun. 2024 and Jun. 2025, respectively.
This news release refers to adjusted EBITDA expectations. NextEra’s adjusted EBITDA expectations represent projected (a) revenue less (b) fuel expense, less (c) project operating expenses, less (d) corporate G&A, plus (e) other income less (f) other deductions including IDR fees. Projected revenue as used in the calculations of projected EBITDA represents the sum of projected (a) operating revenues plus (b) a pre-tax allocation of production tax credits, plus (c) a pre-tax allocation of investment tax credits plus (d) earnings impact from convertible investment tax credits and plus (e) the reimbursement for lost revenue received pursuant to a contract with NextEra.
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