Veresen Announces the Formation of Veresen Midstream with KKR and a $5 Billion Midstream Expansion for Encana and Mitsubishi

December 22, 2014

Client: The Toronto-Dominion Bank

On December 22, 2014, Veresen Inc. announced the formation of a new entity, Veresen Midstream Limited Partnership ("Veresen Midstream"), which will be owned equally by Veresen and affiliates of Kohlberg Kravis Roberts & Co. L.P. ("KKR"), a global investment firm. Veresen Midstream has entered into definitive agreements to acquire certain natural gas gathering and compression assets supporting Montney development in the Dawson area of northeastern British Columbia from Encana Corporation ("Encana") and the Cutbank Ridge Partnership ("CRP"). CRP is a partnership between Encana and Cutbank Dawson Gas Resources Ltd., a subsidiary of Mitsubishi Corporation. Veresen Midstream has also agreed to undertake up to $5 billion of new midstream expansion for Encana and CRP in the Montney region under a 30-year fee-for-service arrangement. Veresen Midstream will be Veresen's primary growth vehicle for its Canadian natural gas and natural gas liquids ("NGL") midstream business.

Veresen Midstream has obtained an underwritten commitment from a syndicate of banks led by RBC Capital Markets, TD Securities and HSBC Bank Canada to provide senior secured credit facilities to finance a portion of the initial acquisition price and expected growth funding. These facilities, which are non-recourse to Veresen, include a US$600 million term loan B, to be drawn on transaction closing, a $1.275 billion non-revolving expansion facility which will be largely undrawn initially and available to fund future growth, and a $75 million revolving credit facility which will be available for operating and working capital requirements.

Norton Rose Fulbright acted for the syndicate of lenders on all Canadian aspects of the debt financings.  The team was led by Rick Borden and included Marlow Gereluk.