Houston midstream company delisted after buy-out

Boardwalk Pipeline Partners LP (market cap $3 billion), a pipeline and storage company with its head office in Greenway Plaza, has been delisted as the General Partner, a subsidiary of New York-based Loews Corporation completed its purchase of the 49% of the common units it didn’t already own.¬†Boardwalk went public in 2005.

In March 2018, the Federal Energy Regulatory Commission (FERC) issued a revised policy statement which meant that they would no longer permit Master Limited Partnerships (MLPs) to recover income tax allowances as part of a pipeline cost of service. As a result Loews argued that this would have a material adverse effect on the maximum applicable rates that Boardwalk could charge its customers in future years. This allowed Loews to trigger the call option on the units it didn’t already own.

Loews attracted controversy and a class action lawsuit from disgruntled minority investors as, rather than issuing a formal buy-out, they stated on April 30 they were considering exercising its call option (calculated at the average price over the last 180 trading days). The minority investors argued this had the effect of depressing the stock price. The class action lawsuit was settled in late June.

Other Houston public MLPs will soon be de-listing as the historical tax advantages disappear;

  • Enbridge (based in Calgary) is in the process of buying out Spectra Energy Partners, Enbridge Energy Partners and Enbridge Energy Management LLC. All three are headquartered in Houston
  • Cheniere Energy is buying out Cheniere Energy Partners LP Holdings. Both companies are headquartered in Houston.

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