The company intends to use net proceeds to repay all its bank debt at closing, approximately $100m. Credit: Sebastian Morelli-Peyton on Unsplash.

CorEnergy Infrastructure Trust has agreed to divest its MoGas and Omega pipeline systems (MoGas System) to natural gas utility company Spire.  

The all-cash deal, subject to customary working capital and other closing adjustments, is valued at approximately $175m.

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The MoGas System is an interstate natural gas transmission and distribution system that provides service to markets in Missouri and Illinois.

The deal, which is subject only to antitrust clearance and customary closing conditions, is due to conclude in the third quarter of 2023.

CorEnergy Infrastructure Trust noted that it expects the deal to generate net proceeds of $165m after taxes and transaction-related costs.

The company intends to use net proceeds to repay all its bank debt at closing, approximately $100m.

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Commenting on the deal, CorEnergy chairman and CEO Dave Schulte said: “The sale of our MoGas and Omega systems enables us to significantly deleverage our balance sheet and strengthen our overall capital structure.

“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.”

CorEnergy hired Evercore as its financial advisor and K&L Gates as legal counsel for the deal.

Schulte added: “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.

“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,” Schulte conlduded.

CorEnergy Infrastructure also noted that it will provide an updated outlook for 2023 after the deal closes.