CMS Energy sells wholesale trading, gas pipeline units

By OGJ editors

HOUSTON, Dec. 23 -- Dearborn, Mich.-based CMS Energy Corp. reached an agreement Monday to sell its interstate natural gas pipeline unit, CMS Panhandle Cos., and that business unit's accompanying subsidiaries to Southern Union Panhandle for $1.828 billion.

Based on the agreement, Southern Union Panhandle—a newly formed entity owned by Southern Union Co. and AIG Highstar Capital LP—will pay $662 million in cash and assume $1.166 billion in debt.

Separately, CMS Energy reported early last week that it will sell the wholesale natural gas trading book of its CMS Marketing, Services & Trading unit to Sempra Energy Trading, the wholesale commodity trading unit of Sempra Energy. That deal—terms of which were not disclosed—is expected to close by yearend.

CMS pipeline unit sale
CMS Energy, beleaguered by debt as an indirect result of the fallout of fellow energy merchant Enron Corp., Houston, said it will apply the proceeds from its pipeline unit's sale to reducing this debt, which has been reduced by $860 million this year alone.

"This sale is a significant step forward in our efforts to increase our financial flexibility, said Ken Whipple, CMS Energy chariman and CEO. "With this agreement, CMS Energy has sold or announced $3.6 billion in asset sales in 2002. Clearly, we are executing our asset sales plan, despite difficult market conditions." Whipple added that the company would continue to pursue strategies that would maintain its "back-to-basics approach" that focus on its balance sheet, risk-reduction, and stronger liquidity.

CMS Energy's Panhandle unit includes CMS Panhandle Eastern Pipe Line Co., CMS Trunkline Gas Co., CMS Trunkline LNG Co. (which operates an LNG terminal complex at Lake Charles, La.), and CMS Sea Robin Pipeline Co.

CMS Energy said it will retain its one-third ownership interests in Centennial refined petroleum liquids pipeline and Guardian natural gas pipeline. The company said it is looking for buyers for these assets as well as its Houston-based electric wholesale book, CMS MST.

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