DBRS Confirms Express Pipeline Limited Partnership & Express Pipeline LLC at A (low) and BBB (low)

DBRS has today confirmed the Issuer Rating of Express Pipeline Limited Partnership & Express Pipeline LLC (collectively, Express) at A (low) and the ratings of A (low) and BBB (low), with Stable trends, on the Senior Secured Notes due 2020 (Senior Notes) and the Subordinated Secured Notes due 2019 (Subordinated Notes; collectively, the Notes), respectively, issued jointly and severally by Express and guaranteed by Platte Pipe Line Company (Platte). All of the ratings are supported by the combined strength of Express and Platte (collectively, Express System) through the latter’s guarantee of the former’s obligations. Consequently, Express System forms the basis of the credit analysis.

This rating action follows the announcement that Spectra Energy Corp (Spectra Energy) has agreed to acquire all of the ownership interests in the Express System for $1.49 billion, consisting of $1.25 billion cash and assumption of $240 million of debt. The transaction value equates to approximately 11.5 times Express System’s expected EBITDA of approximately $130 million in full-year 2013, which is in line with comparable transactions.

The confirmations assume that the Express System’s business and financial risk profiles will remain unchanged under Spectra Energy’s ownership (see related DBRS press release) and that there are no material changes to the transaction details.

Express System consists of Express and Platte, which together transport crude oil from Hardisty, Alberta, to Wood River, Illinois. Express System supplies refineries in the U.S. Rocky Mountains (PADD IV) and U.S. Midwest (PADD II) with crude oil. Please see the DBRS report dated June 13, 2012, for further details with respect to Express System.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

The applicable methodology is Rating North American Pipeline and Diversified Energy Companies (May 2011), which can be found on our website under Methodologies.