CorEnergy to Sell MoGas, Omega Pipeline Systems to Spire for $175 Million

(P&GJ) — CorEnergy Infrastructure Trust, Inc. has entered a deal to sell its MoGas and Omega pipeline systems to Spire Inc. for approximately $175 million in cash, the company said on May 25.

The MoGas System is a 263-mile interstate natural gas transmission and distribution system providing service to markets in Missouri and Illinois. MoGas has pipeline interconnections with Mississippi River Transmission Corp., Panhandle Eastern Pipe Line Co., Rockies Express Pipeline, and Spire STL Pipeline for receipt and distribution of gas.

Through a long-term agreement with the Department of Defense, Omega is a 75-mile natural gas distribution line that primarily serves the US Army's Fort Leonard Wood in central Missouri. Additionally, Omega offers natural gas marketing services to a number of nearby clients.

“The sale of our MoGas and Omega systems enables us to significantly de-leverage our balance sheet and strengthen our overall capital structure,” Dave Schulte, chairman and CEO of CorEnergy, said. “This is one of several 2023 initiatives we are undertaking to improve our balance sheet and operating results, including proposed tariff increases and corporate cost reductions.”

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The transaction highlights include an all-cash deal valued at around $175 million. It is anticipated to be finalized in the third quarter of 2023, pending anti-trust clearance and customary closing conditions. After taxes and transaction-related expenses, an estimated $165 million in net proceeds is expected. These net proceeds will be utilized to repay the entirety of CorEnergy's bank debt, which amounts to approximately $100 million at the time of closing.

“The team at MoGas and Omega has produced reliably profitable results and an excellent safety record as a part of CorEnergy, and we wish to thank them for their dedicated service over the past several years,” Schulte said. “Spire shares our commitment to providing safe, reliable, and environmentally sustainable service to the customers and communities that we serve, and we are pleased they will retain our field operating personnel.”

The company plans to provide an updated 2023 outlook, including opportunities within its California energy transition and other business initiatives, after the transaction has closed.

Evercore acted as the company’s financial advisor while K&L Gates served as legal counsel.

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