CorEnergy to acquire natural gas pipeline for $125 million

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CorEnergy to acquire natural gas pipeline for $125 million

CorEnergy Infrastructure Trust, Inc. has entered into a definitive agreement to acquire the ownership and operations of the USA MoGas Pipeline System for US$125 million in cash.

The MoGas Pipeline System is an approximately 263-mile interstate natural gas pipeline system which originates in northeast Missouri, and extends into western Illinois and central Missouri. The pipeline maintains receipt points with Mississippi River Transmission Corporation in eastern St. Louis and with Panhandle Eastern Pipe Line Company and Rockies Express Pipeline on the northern end of the system.

Primary customers are Laclede Gas Company and Ameren Missouri, both serving the St. Louis metropolitan area with local gas distribution services, and Omega Pipeline serving Ft. Leonard Wood in central Missouri. Omega Pipeline is a wholly owned subsidiary of CorEnergy. Transportation agreements are governed by FERC-approved natural gas tariffs.

David Schulte, Chief Executive Officer of CorEnergy

"We are pleased to add an interstate pipeline to our diversified portfolio of infrastructure assets used by utilities, storage terminal operators, and natural gas producers. Our Board of Directors has confirmed its intent to increase the dividend from $0.130 to $0.135for the quarter ended March 31, 2015 (or $0.54 cents per share annualized) based upon management's expectation that the increase is sustainable."

In conjunction with the acquisition, the company has signed a commitment letter to amend and upsize its current US$30 million revolving senior secured credit facility. The new revolving lines of credit have anticipated capacity of up to US$93 million, consisting of US$90 million at the parent entity level and US$3 million at the subsidiary entity level. The company expects to utilize borrowings under the credit facility, and the net proceeds of its simultaneously announced equity offering to fund the purchase price.

The transaction is expected to close in late November 2014.

BofA Merrill Lynch is acting as exclusive structuring advisor in connection with CorEnergy's energy infrastructure real asset strategy.

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