(Bloomberg) — Funds managed by Blackstone agreed to take a position $3.5 billion to create a three way partnership with EQT Company, enabling the US pure fuel producer to cut back its debt.
The deal will give the non-public fairness big stakes in fuel pipelines serving the Mid-Atlantic, the place knowledge 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 press release Monday.
Blackstone’s funding comes as utilities are bracing for the most important improve in energy use in a technology due to synthetic intelligence and knowledge facilities. They count on a good portion of that electrical energy shall be generated with pure fuel.
Pittsburgh-based EQT’s earnings have declined this 12 months amid a droop in fuel costs triggered by an unusually heat winter that crushed demand for the gasoline and left storage ranges nicely above common. That prompted firms, together with EQT, to throttle again manufacturing.
EQT internet debt, in the meantime, climbed to $13.7 billion as of September 30 after it acquired the proprietor of the Mountain Valley Pipeline, Equitrans Midstream Company, for about $5.5 billion in inventory in July. The Blackstone deal will allow EQT to chop its internet debt to about $9 billion.
Reducing debt might assist EQT retain its investment-grade credit standing. Moody’s Company at present 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 12 months, bringing fuel from the Marcellus shale formation into Virginia, a vital marketplace for knowledge facilities. The opposite belongings concerned within the Blackstone deal additionally embrace the Hammerhead Pipeline, which runs from Pennsylvania into West Virginia.
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The transaction comes as extra non-public credit score managers are pushing to develop past financing buyouts and into funding grade credit score, infrastructure and asset-based credit score. Managers, together with Blackstone, have been seeking to develop their capabilities to offer extra financings on to firms.
Whereas dealmaking has been busy within the oil-and-gas sector, exercise in different industries has been quiet this 12 months. That’s made competitors stiff for financing, and personal credit score managers are more and more seeking to develop their product base.
As of the third quarter, Blackstone’s infrastructure and asset-based credit score phase had over $80 billion in belongings underneath administration and personal funding grade credit score grew over 40% 12 months over 12 months to greater than $90 billion.
