Tallgrass Energy Partners (TEP) Closes $600M Acquisition of Pony Express Interest

Tallgrass Energy Partners (NYSE: TEP) announced that it has closed on the acquisition of a 33.3% interest in Tallgrass Pony Express Pipeline, LLC (“Pony Express”) from a wholly-owned subsidiary of Tallgrass Development, LP, for total consideration valued at $600 million. “We are pleased to announce the completion of our second dropdown transaction at TEP. This acquisition further diversifies the operations and footprint of TEP and continues to demonstrate the execution of our growth strategy. We expect this acquisition to be immediately accretive to our unitholders, and as a result, anticipate recommending that our Board of Directors increase the next two quarterly distributions to result in an aggregate distribution increase of at least $0.40 on an annualized basis,” said Tallgrass President and CEO, David G. Dehaemers, Jr.

Acquisition of a 33.3% Interest in Pony Express

The purchase price for Pony Express was comprised of $597 million in cash and the issuance of 70,340 common units of TEP to Tallgrass Development, LP, which equates to $3 million based on the Partnership’s September 4, 2014 closing price. The terms of the transaction provide TEP a minimum quarterly distribution preference payment of $16.65 million through the quarter ending September 30, 2015 (pro-rated to approximately $5.4 million for the quarter ending September 30, 2014) with distributions of available cash generally shared pro rata thereafter. The terms of the transaction do not require TEP to contribute any additional capital to complete the remaining initial build out of the Pony Express crude oil pipeline project; additional capital would be contributed by Tallgrass Development, LP, without dilution to the Partnership’s 33.3% membership interest.

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