Inergy Midstream Acquires US Salt
Bought 100% of membership interests in US Salt LLC, gaining salt caverns outside Watkins Glen, N.Y. that can be developed into usable natural gas and natural gas liquids storage capacity.
Inergy Midstream LP (NYSE:NRGM) (NRGM) has acquired 100% of the membership interests in US Salt, LLC (US Salt) from Inergy LP (NYSE: NRGY) (NRGY) for total consideration of $192.5 million. The transaction is expected to be immediately accretive to NRGM unitholders on a distributable cash flow per unit basis.
“The acquisition of US Salt represents the first drop down transaction for NRGM and complements our existing natural gas and NGL storage and transportation platform nicely. This transaction demonstrates our commitment to growing NRGM’s distributable cash flow and delivering on the growth expectations for the company,” said John Sherman, President and CEO of NRGM.
US Salt, located on the shores of Seneca Lake outside of Watkins Glen, New York, is one of five major solution mined salt manufacturers in the United States, producing evaporated salt products for food, industrial, pharmaceutical, and water conditioning uses. The US Salt operations are complementary to NRGM’s existing midstream energy storage platform. The solution mining process used by US Salt creates salt caverns that can be developed into usable natural gas and natural gas liquids (NGL) storage capacity. US Salt has approximately 10 bcf of available cavern space that can potentially be developed into additional natural gas storage capacity.
Bill Moler, Senior Vice President and COO of NRGM, added, “US Salt is characterized by very stable cash flows and adds substantial growth opportunities to our gas and NGL storage business at NRGM.”
The consideration of $192.5 million consists of $182.5 million of cash, which will be drawn on NRGM’s revolving credit facility, and $10 million of NRGM common units issued directly to NRGY. On April 16, 2012, NRGM exercised a $100 million accordion expansion of its revolving credit facility, increasing the total borrowing capacity to $600 million.