DBRS Assigns Provisional Preferred Shares Rating of Pfd-3 (high), Stable, to Kinder Morgan Canada Limited

DBRS Limited (DBRS) has today assigned a provisional rating of Pfd-3 (high) with a Stable trend to Kinder Morgan Canada Limited’s (KML or the Company) proposed issuance of Cumulative Redeemable Minimum Rate Reset Preferred Shares, Series 1 (Series 1 Preferred Shares).

DBRS has not assigned an Issuer Rating to KML; however, the Series 1 Preferred Shares rating is based on the credit profile of Kinder Morgan Cochin ULC (KMU; rated BBB (high) with a Stable trend). KMU is KML’s operating subsidiary, which operates the Company’s Canadian energy infrastructure assets, including the existing Trans Mountain Pipeline, the $7.4 billion Trans Mountain Expansion Project (TMEP), the Puget Sound pipeline, the Canadian portion of Cochin pipeline as well as various terminal, rail and storage facilities.

KML intends to use the proceeds from the offering to indirectly subscribe for preferred units in Kinder Morgan Canada Limited Partnership (KMLP; 100% owner of KMU) through Kinder Morgan Canada GP Inc. (KMCGP; 100% owned by KML). KMLP in turn intends to use such proceeds to finance the development, construction and completion of TMEP and the Base Line Terminal project as well as potential future growth opportunities, to repay indebtedness and for general corporate purposes. KMLP receives all dividends paid by KMU. KMLP’s preferred units mirror the terms and conditions of the Series 1 Preferred Shares issued by KML. The dividends due on the Series 1 Preferred Shares are matched by the dividends paid on the preferred units of KMLP to which KML subscribes. Dividends on KMLP’s preferred units have priority over dividends paid on KMLP’s common units and are distributed through KMCGP to KML for further distribution to holders of KML’s Series 1 Preferred Shares. KMLP and KMCGP have no debt. The rating on KML’s Series 1 Preferred Shares is therefore linked to KMU’s rating and any change in KMU’s rating could affect the rating of the Series 1 Preferred Shares.

Notes:
All figures are in Canadian 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 principal methodologies are Rating Companies in the Pipeline and Diversified Energy Industry, DBRS Criteria: Guarantees and Other Forms of Support, DBRS Criteria: Rating Corporate Holding Companies and Their Subsidiaries and DBRS Criteria: Preferred Share and Hybrid Security Criteria for Corporate Issuers, which can be found on dbrs.com under Methodologies.

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