• Combines three complementary platforms to create a premier western Canadian processing entity
• New joint venture to be operated, managed and majority owned by Pembina
CALGARY, ALBERTA, March 1, 2022 – Pembina Pipeline Corporation ("Pembina") (TSX: PPL; NYSE: PBA) and KKR today announced the signing of definitive agreements to combine their respective western Canadian natural gas processing assets into a single, new joint venture entity ("Newco"), which will be owned 60 percent by Pembina and 40 percent by KKR’s global infrastructure funds. The transaction brings together three complementary platforms to create a premier western Canadian processing entity with the ability to serve customers throughout the Montney and Duvernay trends from north central Alberta to northeast British Columbia.
Included in the transaction are Pembina’s wholly owned field-based natural gas processing assets, Veresen Midstream which is jointly owned by Pembina and funds managed by KKR, and Energy Transfer Canada (“ETC”) which is jointly owned by Energy Transfer and funds managed by KKR. Newco has entered into an agreement to acquire Energy Transfer’s interest in ETC, which is expected to be completed concurrently with the closing of the other transactions. Collectively, the ascribed value of these transactions totals approximately C$11.4 billion, excluding the value of assets under construction.
The transaction establishes meaningful alignment between Pembina and KKR and positions the joint venture to realize significant efficiencies and economies of scale. Newco will be managed and operated by Pembina, and will be led by Chris Rousch, current President and CEO of Veresen Midstream.
"We have developed a great, trusted relationship with Scott Burrows, Jaret Sprott and the industry-leading team at Pembina and we are thrilled to be deepening that partnership with today’s strategic combination," said Brandon Freiman, Partner and Head of North American Infrastructure at KKR. "Importantly, we share Pembina’s views on the positive and essential role that Canadian natural gas plays within the global energy transition and we are pleased to combine these assets to create a stronger platform to meet that opportunity."
With the support of Pembina and KKR, Newco will integrate Environmental, Social and Governance (“ESG”) considerations into its governance structure and long-term business strategy. Newco assets will be included in Pembina’s target of achieving a 30 percent reduction in greenhouse gas emissions intensity by 2030, against a 2019 baseline. Pembina’s policies and management systems related to environmental protection; health and safety; diversity, equity and inclusion; cybersecurity; Indigenous and community relations; and other ESG matters will be extended to include Newco’s assets not currently managed by Pembina.
"Pembina has enjoyed a strong relationship with KKR as a partner in Veresen Midstream over the past four years. The formation of this new joint venture is a natural extension of our relationship," said Scott Burrows, Pembina’s President and CEO. "We are extremely pleased to be creating this exciting new company with KKR to drive real synergies and deliver a wider suite of commercial opportunities."
Paul Workman, Director at KKR, added, “The industrial logic of combining these three complementary businesses in a fully-aligned partnership is compelling. We believe that a well-capitalized, customer-oriented private partnership between KKR and one of Canada’s leading infrastructure companies is incredibly well positioned to create value for our investors, customers and the communities in which we operate.”
Completion of the transactions is subject to approval under the Competition Act (Canada) and other customary closing conditions. Closing is expected to occur late in the second quarter or third quarter of 2022. Newco’s permanent name is expected to be announced prior to closing.
RBC Capital Markets is acting as financial advisor and Blake, Cassels & Graydon LLP is acting as legal advisor to Pembina. TD Securities is acting as financial advisor and Torys LLP is acting as legal advisor to KKR.
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About KKR
KKR is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds. KKR’s insurance subsidiaries offer retirement, life and reinsurance products under the management of Global Atlantic Financial Group. References to KKR’s investments may include the activities of its sponsored funds and insurance subsidiaries. For additional information about KKR & Co. Inc. (NYSE: KKR), please visit KKR’s website at www.kkr.com and on Twitter @KKR_Co.
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