Dallas, Texas 06/26/2015 (Financialstrend) – Corenergy Infrastructure Trust Inc (NYSE:CORR) has agreed to acquire Grand Isle Gathering System From Energy XXI Ltd (NASDAQ:EXXI) for $245 million. That will allow the company to diversify its portfolio of energy infrastructure. Aside from this, the company expects the acquisition to support the expected 11% growth in the dividend rate. The company will also assume the asset retirement obligation liabilities of about $12.5 million. That will take the total consideration to $257.5 million.
Essential Infrastructure
Corenergy Infrastructure Trust Inc (NYSE:CORR) indicated that Grand Isle Gathering System (GIGS) is a midstream pipeline system firm. That is related to onshore facilities catering to the oil-producing fields in the Gulf of Mexico. GIGS offers essential infrastructure to transport oil, as well as, water onto land from offshore fields. The acquisition would expand its portfolio of assets in REIT-qualifying energy infrastructure.
The acquisition fulfills the targeted tactics, as well as, the investment criteria of the company. That included critical asset and high quality. GIGS generated revenue of about $486 million for Energy XXI Ltd (NASDAQ:EXXI) in the last fiscal year of 2014. The company believes it is a high quality since it connects seven oil fields. That included four among the top 15 biggest fields in the Gulf of Mexico.
Financing Mode
Corenergy Infrastructure Trust Inc (NYSE:CORR) expects to fund the acquisition through the offering of a follow-on shares and convertible debt. While the company will issue about 11.25 million shares, the convertible debt part will be $75 million. That apart, the company will expand its current senior credit facilities. The balance will be from its available cash. The acquisition is predicted to be completed in late June.
The board of Corenergy Infrastructure Trust Inc (NYSE:CORR) also confirmed its plan to boost its dividend rate to 60 cents a share from 54 cents after the completion of the transaction. The distribution will commence from the third quarter of the current calendar year.
