Dominion Energy Transfers Stake in Cove Point to Brookfield Asset Management

October 21, 2019 | Investments, News, Real Estate

Brookfield Asset Management scores stake in LNG facility

Dominion Energy has entered an agreement with Brookfield Super-Core Infrastructure Partners.

The latter is an infrastructure fund managed by Brookfield Asset Management (BAM). The deal will see Dominion transfer a 25 percent non-controlling equity interest in Cove Point to Brookfield. In addition, Dominion will receive cash consideration of more than $2 billion, excluding working capital.

The announcement is part of Dominion Energy’s previously communicated intention to establish a permanent capital structure for Cove Point.

Dominion Energy and Cove Point

Dominion Energy Cove Point LNG (Cove Point) owns a liquefied natural gas (LNG) import, export, and storage facility. The facility is located on the western shore of the Chesapeake Bay in Lusby, Maryland. The company also operates a  136-mile pipeline that interconnects the facility with the interstate pipeline system.

Furthermore, these assets provide liquefaction, gasification, transportation, storage, and peaking gas supply services to customers in the United States, India, and Japan. In 2018, the company completed a $4.1 billion expansion to enable natural gas exports.

The transaction represents an implied enterprise value of $8.22 billion, excluding working capital. The deal also supports Cove Point’s existing operating earnings per share and earnings growth guidance. Dominion will use proceeds for general corporate purposes. These include the reduction of its annual common equity financing. The firm discussed this plan at its investor day in March 2019.

Finally, the transaction will likely close by the end of 2019. Dominion Energy will then retain full operational control of the facility and its services. Furthermore, the recapitalization agreement will not impact existing customers and employees.

[Related: Hedge Elliott Management May Join Apollo Global Management to Save EP Energy Corp.]

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