El Paso Corporation (EP)

[NovoMira]

UPDATE 1-El Paso Pipeline Partners IPO raises $500 mln

Thu Nov 15, 2007 6:14pm EST
(Adds use of proceeds, financial detail, background)

NEW YORK, Nov 15 (Reuters) - El Paso Pipeline Partners LP on Thursday raised $500 million with an initial public offering that priced in the middle of a forecast range.

The 25 million common unit offering sold for $20 per unit, compared with a $19 to $21 forecast range.

The master limited partnership (MLP) was formed by El Paso Corp (EP.N:) to own and operate natural gas transportation pipelines, storage and other midstream assets, according to an amended prospectus filed with the U.S. Securities and Exchange Commission.

Underwriters, led by Lehman Brothers (LEH.N:), Citigroup (C.N:), Goldman Sachs (GS.N:) and UBS Securities (UBSN.VX:) (UBS.N:), have the option to purchase an additional 3.75 million shares to cover overallotments.

The company said it will use IPO proceeds to make a cash distribution and to repay a note payable to El Paso Corp and cover fees and expenses.

For the year ended Dec. 31, 2006, it posted net income of $77 million, on total operating revenue of $97 million.

The company has applied to list its shares on the New York Stock Exchange under the symbol "EPB" (EPB.N:).

MLPs are popular with energy companies, especially those that own infrastructure and pipeline, as a way to wring additional value out of assets.

The partnerships pay no corporate taxes and distribute nearly all of their profits to investors. But interest in MLPs has been rattled by the global credit crunch, leaving investors spooked by the notion that such partnerships are somewhat more reliant on capital markets to fund growth.

The Alerian Capital index (.AMZ:) of MLPs is up about 8 percent since January, but 10.5 percent below a midyear peak, with the index rising to 339 in July.

Earlier this month, independent exploration and production company Devon Energy Corp (DVN.N:) said it was canceling plans to form a MLP, citing the weaker market.

Energy companies Williams Companies Inc (WMB.N:) and Anadarko Petroleum Corp (APC.N:) both have public offerings of MLPs in the works.