(Bloomberg) – Funds managed by Blackstone Inc. agreed to speculate $3.5 billion to create a three way partnership with EQT Corp., enabling the U.S. pure gasoline producer to scale back its debt.
The deal will give the non-public fairness large stakes in gasoline pipelines serving the Mid-Atlantic, the place information facilities are forecast to ship demand surging within the years forward. EQT plans to make use of the proceeds to pay down a time period mortgage and credit score facility, in addition to repurchase and redeem its bonds, the corporate mentioned in a assertion Monday.
EQT shares rose 2.9% at 9:57 a.m. in New York. Blackstone slipped 1.1%.
Blackstone’s funding comes as utilities are bracing for the biggest enhance in energy use in a technology due to synthetic intelligence and information facilities. They anticipate a good portion of that electrical energy might be generated with pure gasoline.
Pittsburgh-based EQT’s earnings have declined this yr amid a stoop in gasoline costs triggered by an unusually heat winter that crushed demand for the gas and left storage ranges effectively above common. That brought on firms, together with EQT, to throttle again manufacturing.
EQT web debt, in the meantime, climbed to $13.7 billion as of Sept. 30 after it acquired the proprietor of the Mountain Valley Pipeline, Equitrans Midstream Corp., for about $5.5 billion in inventory in July. The Blackstone deal will allow EQT to chop its web debt to about $9 billion.
Slicing debt might assist EQT retain its investment-grade credit standing. Moody’s Corp. presently charges EQT triple B minus, the bottom stage above junk territory.
The three way partnership will comprise belongings together with the 300-mile (483-kilometer) Mountain Valley Pipeline that went into service earlier this yr, bringing gasoline from the Marcellus shale formation into Virginia, an important marketplace for information facilities. The opposite belongings concerned within the Blackstone deal additionally embody the Hammerhead Pipeline, which runs from Pennsylvania into West Virginia.
The transaction comes as extra non-public credit score managers are pushing to increase past financing buyouts and into funding grade credit score, infrastructure and asset-based credit score. Managers, together with Blackstone, have been seeking to increase their capabilities to supply extra financing on to firms.
Whereas dealmaking has been busy within the oil-and-gas sector, exercise in different industries has been quiet this yr. That’s made competitors stiff for financing, and personal credit score managers are more and more seeking to increase their product base. As of the third quarter, Blackstone’s infrastructure and asset-based credit score section had over $80 billion in belongings underneath administration and personal funding grade credit score grew over 40% yr over yr to greater than $90 billion.
RBC Capital Markets LLC and Kirkland & Ellis LLP suggested EQT. Citigroup Inc. and Milbank LLC suggested Blackstone.
