McGuireWoods Team Advises Spectra Energy Partners’ Conflicts Committee in Selling Interests in Two Pipelines

October 19, 2015

A multidisciplinary team of McGuireWoods lawyers advised the conflicts committee of Spectra Energy Partners LP in the sale of a share of two natural gas liquids pipelines to Spectra Energy Corp. The sale was part of a deal completed today to transfer assets and $1.5 billion in cash to a joint venture owned by Spectra Energy Corp. and Phillips 66.

Spectra Energy Partners is a Houston-based master limited partnership (MLP) formed by Spectra Energy Corp., which announced that it will acquire the partnership’s one-third ownership interests in the Sand Hills and Southern Hills pipelines. Those two lines carry natural gas liquids from the Permian Basin and Eagle Ford Shale regions of Texas to processing hubs along the Gulf Coast.

In exchange for Spectra Energy Partners’ interests in the pipelines, Spectra Energy has agreed to transfer for redemption and cancellation 21,560,000 limited partner units and 440,000 general partner units. Spectra Energy also will grant a three-year, $4 million-per-quarter giveback of distributions on its incentive distribution rights, beginning with distributions payable in the first quarter of 2016

In a separate aspect of the deal that did not involve McGuireWoods, Spectra Energy has also announced that it will contribute its newly acquired interests in the pipelines, and Phillips 66 will contribute $1.5 billion in cash to Denver-based DCP Midstream LLC as part of a plan to establish a sustainable cash flow for the joint venture.

The transaction between Spectra Energy and Spectra Energy Partners was unanimously approved by the conflicts committee of Spectra Energy Partners’ general partner, which McGuireWoods represented. The conflicts committee is comprised solely of independent directors.

“We were delighted to work with the conflicts committee of Spectra Energy Partners on this important and partly unique deal,” said Houston-based partner David Ronn, who led the McGuireWoods team. “We’re also excited about the continued growth of our master limited partnership practice, particularly with respect to conflicts committee representation, and the resources McGuireWoods can deploy to assist clients in these complex transactions.”

The team also included Barbara de Marigny and Sarah Lieber in Houston, Rachel Mantz in Chicago and Jeffrey Rothschild in New York. McGuireWoods has a cross-disciplinary team of corporate, energy and tax lawyers who provide industry-leading advice to clients in all aspects of MLP transactions.

Spectra Energy Partners is one of the largest pipeline MLPs in the United States. It owns and operates strategically located pipeline and storage assets that connect growing supply areas to high-demand markets for natural gas, natural gas liquids and crude oil. Its assets include more than 17,000 miles of transmission and gathering pipelines, approximately 166 billion cubic feet of natural gas storage, and approximately 4.8 million barrels of crude oil storage.