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Kinder Morgan and Kinder Morgan Canada struck a deal Tuesday with the Canadian Government to sell the Trans Mountain Pipeline System and its expansion project for C$4.5 billion. The deal includes the pipeline and terminals and ensures the pipeline moves forward.

 Transmountain pipeline

Kinder Morgan will also work with the Canadian Government to seek a third party buyer through July 22, 2018. The Government has also agreed to fund the remaining planning and construct work on the project to ensure it continues,

Market Reaction

Kinder Morgan Inc NYSE: $KMI

· $16.26 ▲ 0.37 +2.33%

Kinder Morgan Canada Ltd Toronto: $KML,CN

· $17.51CAD +0.92 +5.55%

Note Price at May 29, 9:53 AM EDT

The deal is expected to close in the third or fourth quarters of 2018.

“We are pleased that KML and the Government were able to reach agreement on a transaction that benefits the people of Canada, TMEP shippers and both KMI and KML shareholders,” said KMI Chief Executive Officer, and KML Chairman and CEO, Steve Kean.

Update on Affect on KMI Earnings

“The outcome reached represents the best opportunity to complete TMEP and thereby realize the great economic benefits promised by that project. “For KMI, despite losing the EBITDA associated with the Trans Mountain system, we still expect to meet or exceed our 2018 distributable cash flow (DCF) per share target. The transaction will also have a positive impact on our consolidated balance sheet, as we expect KMI’s approximately 70 percent share of after tax proceeds to be approximately US$2.0 billion. Additionally, we continue to expect a 2018 annualized dividend of $0.80 per share, followed by $1.00 per share in 2019 and $1.25 per share in 2020, a growth rate of 25 percent annually,” said Kean.

Kean added “We will provide additional financial guidance after the transaction closes"

Source: Kinder Morgan Newswire

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