initial public offerings (IPOs) trading on American exchanges

Friday, November 22, 2013

Midcoast Energy Partners (MEP) began trading on the NYSE on 7 November 2013

Midcoast Energy Partners (NYSE: MEP) is an Enbridge Energy Partners (NYSE: EEP)-backed LP that went public on Nov. 7. The partnership is a pure-play US natural gas and NGL midstream business with a 39 percent controlling interest in Midcoast Operating, a limited partnership that owns a network of natural gas and NGL gathering and transportation systems, natural gas processing and treating facilities and NGL fractionation facilities primarily located in Texas and Oklahoma. Midcoast Operating also owns and operates natural gas, condensate and NGL logistics and marketing assets that support its gathering, processing and transportation business.

The business primarily consists of gathering unprocessed and untreated natural gas from wellhead locations and other receipt points, processing the natural gas to remove NGLs and impurities at processing and treating facilities and transporting the processed natural gas and NGLs to intrastate and interstate pipelines for transportation to customers and market outlets. The partnership also markets natural gas and NGLs to wholesale customers.

The IPO raised $333 million by offering 18.5 million shares at $18. This was below the expected range of $19 to $21. MEP’s partnership agreement provides for a minimum quarterly distribution of $0.3125 per unit for each whole quarter, or $1.25 per unit on an annualized basis. At the recent closing price of $17.83 this equates to an annual yield of 7.0 percent.

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