Energy

Kinder Morgan Files for Canadian IPO

Paul Ausick

Published: May 26, 2017 12:51 pm

Last Updated: January 12, 2020 11:36 am

Energy infrastructure company Kinder Morgan Inc. (NYSE: KMI) has filed documents with the Canadian securities regulator for an initial public offering (IPO) of 102.94 million shares of an indirect subsidiary, Kinder Morgan Canada Ltd., at an IPO price of C$17 per share. The offering is expected to be made before May 31 and the shares will trade on the Toronto Stock Exchange under the ticker symbol KML. Gross proceeds are expected to total C$1.75 billion.

The new company’s assets include the Trans Mountain pipeline system, along with its associated terminals and storage facilities, the Puget Sound and Jet Fuel pipeline systems, the Canadian Cochin pipeline system, the Vancouver Wharves Terminal in British Columbia, and various merchant liquids storage and handling terminals and interests in crude oil loading facilities in the Edmonton, Alberta area.

Upon completion of the IPO, Kinder Morgan (KMI) will hold a stake of about 70% (an approximate 66% interest if the underwriters’ over-allotment option is fully exercised) in the Kinder Morgan Canada Limited Partnership which will own Kinder Morgan’s Canadian business. Kinder Morgan Canada Ltd. will own the rest.

Underwriters for the offering include TD Securities Inc., RBC Dominion Securities Inc., CIBC World Markets Inc., Scotia Capital Inc., BMO Nesbitt Burns Inc., National Bank Financial Inc., Barclays Capital Canada Inc., Credit Suisse Securities (Canada), Inc., Deutsche Bank Securities Inc., J.P. Morgan Securities Canada Inc., Merrill Lynch Canada Inc., Mizuho Securities USA LLC, MUFG Securities (Canada), Ltd. and Societé Générale Capital Canada Inc.

In an announcement released Thursday, Kinder Morgan CEO Steve Kean said:

Upon the completion of the IPO, we will have secured satisfactory financing for the Trans Mountain Expansion Project. We are excited to be moving forward on this tremendous project which is expected to benefit KMI and KML as well as our Trans Mountain shippers and Canada. The KML IPO is one of the largest ever in Canada and provides Canadian investors the opportunity to invest in a leading integrated midstream set of western Canadian assets. … The Offering also strengthens KMI’s balance sheet and strengthens our ability to return value to shareholders.

Ian Anderson, president of Kinder Morgan Canada, said:

Our execution planning is complete, our approvals are in hand, and we are now ready to commence construction activities this fall generating thousands of direct jobs for Canadians, including significant benefits to Indigenous communities in Alberta and British Columbia.

The Trans Mountain Expansion Project is a C$7.4 billion project that will boost the capacity of the existing Trans Mountain pipeline from 300,000 barrels a day to 890,000 barrels a day. Kinder Morgan said the expanded pipeline has commitments for 707,500 barrels a day under 15- and 20-year contracts. The remaining capacity is reserved for spot volumes, a requirement imposed on the project by Canada’s National Energy Board. Construction is expected to begin in September and completion is expected in December 2019.

Kinder Morgan’s stock traded down about 1% in the noon hour Friday at $19.22 in a 52-week range of $17.07 to $23.36. The full filing is available at the Sedar website. At Friday’s exchange rate, one U.S. dollar is worth C$1.35.