Spectra Energy Dropsdown Pipeline

Dropdown of Maritimes & Northeast Pipeline LLC,a natural gas pipeline in NE, for $375 million in cash and stock.

Spectra Energy Partners LP (NYSE: SEP) plans to buy a 38.76% stake in the Maritimes & Northeast Pipeline LLC from Spectra Energy Corp. (NYSE: SE) for $375 million in cash and stock.

The price for the dropdown of the natural gas pipeline includes about $319 million in cash and $56 million in newly issued partnership units. Spectra Energy Corp. controls the general partner of Spectra Energy Partners.

M&N owns a FERC-regulated, 338-mile mainline interstate natural gas transportation system which extends from the border of Canada near Baileyville, Maine, to northeastern Massachusetts and has market delivery capability of approximately 0.8 billion cubic feet (Bcf) per day of natural gas. The pipeline's location and key interconnects with Spectra Energy's transmission system link regional natural gas supplies to the Northeast U.S. and Atlantic Canadian markets. M&N US's stable cash flows are backed by an average contract life of approximately 19 years and over 90% fee-based revenues.

"We are pleased to have a stake in the Maritimes & Northeast Pipeline which further enhances Spectra Energy Partners' profile of steady, fee-based cash flows and broadens the partnership's market reach into the Northeast, building on its significant Southeast U.S. position," Julie A. Dill, president and chief executive, said in a release.
SEP's estimated 2013 incremental EBITDA and cash available for distribution from its 38.76% interest in M&N U.S. assets is projected to be about $50 million and $31 million, respectively.

The company plans to utilize short-term borrowings to fund its cash consideration. Spectra Energy Partners expects long-term financing for the transaction to be a combination of debt and equity. The transaction is expected to close on Oct. 31.