(Source: Business Wire)
Crosstex Energy, L.P. (NASDAQ: XTEX) (the Partnership) announced today that it has entered into a definitive agreement to sell its assets in Mississippi, Alabama and South Texas for $220 million to Southcross Energy, LLC, a Dallas-based natural gas transportation and processing company. Proceeds from the sale will be used to pay down more than $200 million of the Partnership's outstanding debt, which will satisfy the targets for debt reductions in September 2009 and December 2009 established in the Partnership's recent amendments to its debt facilities. The Partnership expects the sale to close on July 31, 2009. Closing is contingent on the approval of the lenders under the Partnership's revolving credit and senior note agreements and certain other conditions.
"The sale of our Mississippi, Alabama and South Texas assets enables us to strengthen our balance sheet as we pursue our strategy to increase liquidity, reduce leverage and improve profitability," said Barry E. Davis, Crosstex President and Chief Executive Officer. "As we have said, asset sales are an important part of our deleveraging initiatives, and we will explore strategic transactions on an ongoing basis that we believe are in the best interests of the company and our stakeholders. We continue to focus on the growth of our strategic assets in North Texas and Louisiana, as well as our Treating business, and remain committed to being a premier provider of midstream energy services."
"These are perfect assets to provide the foundation of our new company," said David Biegler, Chairman and Chief Executive Officer of Southcross Energy. "This is a well-balanced portfolio across a broad range of assets that also provides strong organic, as well as acquisition, growth prospects."
The Mississippi and Alabama systems consist of approximately 780 miles of intrastate gathering and transmission pipelines with throughput capacity of about 185,000 million British thermal units per day (MMBtu/d). The South Texas system consists of approximately 1,400 miles of intrastate gathering and transmission pipelines with throughput capacity of about600,000 MMBtu/d and two processing facilities with a total processing capacity of approximately195,000 MMBtu/d.These three systems generated gross margin of $12 million and operating expenses of $4 million for the first quarter of 2009.
Goldman, Sachs & Co. is serving as the exclusive financial advisor to Crosstex in connection with the transaction.
