Exchange ratio of .3068 Pembina shares for each share of KML common
equity;
Consideration represents a 38 percent
premium to KML's closing price on August 20,
2019
CALGARY, Aug. 21, 2019 /CNW/ - Kinder Morgan Canada
Limited (TSX: KML) today announced that it has reached an agreement
with Pembina Pipeline Corporation (TSX: PPL; NYSE: PBA)
(Pembina) under which Pembina has agreed to acquire all of the
outstanding common equity of KML (including the 70 percent majority
voting interest held by Kinder Morgan Inc. (NYSE: KMI)),
subject to the terms of the arrangement agreement between KML and
Pembina. On closing, KML shareholders will receive .3068
shares of Pembina for each KML share. Based on yesterday's closing
price for Pembina, the total
consideration to be received by KML common shareholders is valued
at $15.12 per KML share, which
represents a 38 percent premium to yesterday's KML closing
price.
"KML views Pembina as a leading
infrastructure services provider to the North American energy
industry," said KML Board Chairman and CEO Steve Kean. "We believe KML's assets will
be a great fit with Pembina's
business and this transaction is highly beneficial to KML's
shareholders. This transaction gives KML's public
shareholders the opportunity to participate in a larger and growing
platform of North American midstream energy assets."
In addition, Pembina has agreed
to purchase the U.S. portion of the Cochin Pipeline from Kinder
Morgan, Inc. (NYSE: KMI) for US$1.546
billion. The closing of the two transactions are
cross-conditioned upon each other.
"The KML strategic review was completed in May of this year and
did not result in an acceptable transaction. About two months
following the conclusion of the strategic review Pembina put forward an attractive proposal,"
said Kean. The KML special committee, which is composed of
KML's independent directors, received a fairness opinion, finding
the consideration to be fair to KML shareholders from a financial
point of view. The KML special committee unanimously
recommended the Pembina proposal
to the KML board and the full KML board recommends that KML
shareholders approve the transaction. In addition, KMI has
agreed to vote its shares in favor of the transaction.
"Over the past 10 years, the KML team has built the premier
Canadian merchant terminal business. I congratulate this
dedicated team for their hard work and perseverance during this
period of unavoidable uncertainty," added John Schlosser, KML President. "Their
exceptional competence, focus and determination bodes well for the
future of these vital Canadian energy infrastructure assets."
Details of the Transaction
The proposed transaction will be effected as a plan of
arrangement under Section 193 of the Business Corporations
Act (Alberta), and its
completion will be subject to a number of closing conditions,
including the approval of KML shareholders and the Court of Queen's
Bench of Alberta, as well as
certain regulatory approvals and other customary closing
conditions. The parties expect to close the transaction late
in the fourth quarter of 2019 or in the first quarter of 2020.
The transaction is subject to approval of at least 66 2/3
percent of holders of KML restricted voting shares and special
voting shares represented in person or by proxy at a special
meeting of KML shareholders to be called to approve the
transaction, voting together as a single class, and the majority of
holders of KML restricted voting shares represented in person or by
proxy, excluding the votes of those persons whose votes are
required to be excluded under MI 61-101.
Completion of the transaction is also subject to approval under
the Competition Act and the Canada Transportation
Act, as well as acceptance of the Toronto Stock Exchange.
In addition, the transaction is subject to concurrent completion of
the sale of the U.S.-regulated Cochin pipeline system by KMI to Pembina.
Further information regarding the proposed transaction will be
contained in a proxy statement of KML that it will prepare, file
and mail in due course to its shareholders in connection with the
special meeting of KML shareholders.
A copy of the arrangement agreement with respect to the proposed
transaction will be filed on the SEC's EDGAR system at www.sec.gov,
under KML's profile on SEDAR at www.sedar.com and on KML's website
at ir.kindermorgancanadalimited.com.
The U.S. portion of the Cochin Pipeline is regulated by the
Federal Energy Regulatory Commission and extends from the Kinder
Morgan station near Riga, Michigan
to the International Boundary near Maxbass, North Dakota.
J.P. Morgan has served as financial advisor to KML in the
transaction. BMO Capital Markets has served as financial advisor to
the KML special committee in the transaction. The KML special
committee has received an opinion from BMO Capital Markets as to
the fairness, from a financial point of view and as of the date of
such opinion, of the consideration provided for in the transaction,
based on and subject to the assumptions, limitations,
qualifications and other matters set forth in such opinion. Blake,
Cassels & Graydon LLP is acting as Canadian legal advisor to
KML and Bracewell LLP is acting as U.S. legal advisor to KML.
Goodmans LLP is acting as legal advisor to the KML special
committee in the transaction.
About Kinder Morgan Canada Limited (TSX: KML).
KML manages and is the holder of an approximately 30
percent minority interest in a portfolio of strategic energy
infrastructure assets across western Canada. Kinder Morgan,
Inc. (NYSE: KMI) holds an approximately 70 percent majority voting
interest in KML and a corresponding 70 percent economic interest in
KML's business and assets. KML focuses on stable, fee-based
energy transportation and storage assets that are central to the
energy infrastructure of Western Canada. We strive to promote
shareholder value by increasing utilization of our existing assets
while controlling costs and operating in a safe and environmentally
responsible way. For more information
visit kindermorgancanadalimited.com.
Additional Information and Where to Find It
This communication does not constitute an offer to sell or
the solicitation of an offer to buy any securities or a
solicitation of any vote or approval. The proposed transaction
anticipates that the offer and sale of Pembina shares will be exempt from
registration under the Securities Act of 1933, as amended (the
Securities Act), pursuant to Section 3(a)(10) of the Securities
Act. Consequently, such shares will not be registered under the
Securities Act or any state securities laws.
In connection with the proposed transaction, KML will file a
proxy statement, as well as other materials. WE URGE INVESTORS TO
READ THE PROXY STATEMENT AND THESE OTHER MATERIALS CAREFULLY WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE COMPANY AND THE PROPOSED TRANSACTION.
Investors will be able to obtain free copies of the proxy statement
(when available) and other documents that will be filed by KML with
the SEC at http://www.sec.gov, the SEC's website, or from KML's
website (www.kindermorgancanadalimited.com) under the tab,
"Investor Relations" and then under the heading "SEC
Filings."
Participants in the Solicitation
KML and Pembina and their
respective directors and certain of their executive officers may be
deemed, under SEC rules, to be participants in the solicitation of
proxies from the KML shareholders with respect to the proposed
transaction. Information regarding KML's officers and directors is
included in its definitive proxy statement for its 2019 annual
meeting filed with SEC on April 18,
2019. Information regarding Pembina's officers and directors is included
in the Management Information Circular for its 2019 annual meeting
of common shareholders filed with the SEC as Exhibit 99.1 to Form
6-K on March 29, 2019. More detailed
information regarding the identity of potential participants, and
their direct or indirect interests, by securities holdings or
otherwise, will be set forth in the proxy statement and other
materials to be filed with SEC in connection with the proposed
transaction.
Important Information Relating to Forward-Looking
Statements
This news release includes "forward-looking information,"
"financial outlook," and "forward-looking statements" within the
meaning of applicable securities laws (forward-looking
statements). Generally the words "expects," "believes,"
"anticipates," "plans," "will," "shall," "estimates,"
"contemplates," and similar expressions identify forward-looking
statements, which are generally not historical in nature.
Forward-looking statements in this news release include statements,
express or implied, concerning, without limitation: the proposed
transaction, including the expected closing date, the timing and
anticipated regulatory requirements, court and securityholder
approvals of the transaction, the ability of KML and Pembina to satisfy conditions to closing of
the transaction and the anticipated benefits of the
transaction. Forward-looking statements are not guarantees of
performance. They involve significant risks, uncertainties and
assumptions. Any financial outlook or other forward-looking
statements provided in this news release have been included for the
purpose of providing information relating to management's current
expectations and plans for the future, are based on a number of
significant assumptions and may not be appropriate, and should not
be used, for any other purpose. Future actions, conditions or
events may differ materially from those expressed in
forward-looking statements. Many of the factors that will determine
the successful closing of the sale of KML and the timing thereof
are beyond the ability of KML to control or predict. As noted
above, the forward-looking statements in this release are based on
a number of material assumptions, including among others those
discussed in this news release or inherent in the factors
highlighted below. Among other things, specific factors that could
cause actual results to differ from those indicated in the
forward-looking statements provided in this news release include,
without limitation: the ability of the parties to receive, in a
timely manner, the necessary regulatory, court, securityholder,
stock exchange and other third-party approvals; and the ability of
the parties to satisfy, in a timely manner, the other conditions to
closing of the transactions, including the concurrent closing of
the sale of the U.S.-regulated Cochin pipeline system by KMI to Pembina.
The foregoing list should not be construed to be exhaustive.
In addition to the foregoing, important additional information
respecting the material assumptions, expectations and risks
applicable to forward-looking statements included in this news
release are set out in KML's press release dated December 3, 2018 regarding financial expectations
for 2019, KML's Annual Report on Form 10-K for the year-ended
December 31, 2018 (under the headings
"Risk Factors," "Information Regarding Forward-Looking Statements,"
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and elsewhere) and KML's subsequent reports,
which are available through the SEC's EDGAR system at www.sec.gov,
under KML's profile on SEDAR at www.sedar.com and on KML's website
at ir.kindermorgancanadalimited.com. Shareholders and
prospective investors are urged to review and carefully consider
such information prior to making any investment decision in respect
of KML's restricted voting shares. The risk factors
applicable to KML could cause actual results to vary materially
from those contained in any forward-looking statements. KML
disclaims any obligation, other than as required by applicable law,
to update the forward-looking statements included in this
release.
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SOURCE Kinder Morgan Canada Limited