Barclays Investment Banking Pitch Book
Preliminary Assumptions
Assumptions (1)
Base Case: KMI purchases all of the publicly owned equity in KMP/EPB at a 10% premia on 1/1/15 (KMR purchased at KMP
purchase price)
• All share / unit prices as of 7/14/2014
▪ KMI price: $35.97
*
*
Prices: KMP: $80.79/KMR: $77.48/EPB: $35.74
Acquisition Prices: KMP. $88.87/KMR: $88.87/EPB: $39.31
Assumes year-end 2014 share counts
• Assumes KMI finances the KMP and EPB acquisitions with -88% equity / -12% debt and assumes outstanding KMP and EPB debt
. $4.0 billion of new acquisition debt, issued at a 4.75% interest rate
* Assumes $200 million of transaction expenses, assumed paid for with debt (4.75%)
• Assumes KMI finances the KMR acquisition with 100% equity
• Assumes KMI steps-up the value of the assets at KMP and EPB for tax purposes
• Step-up calculated based on 8/8ths value of KMP and EPB units plus debt outstanding, multiplied by percentage of common
units owned by the public. Purchase of KMR does not receive tax step-up
• Tax basis of KMP and EPB asset step-up reduced by $3.0 billion
• Asset values attributable to KMI's current ownership in KMP and EPB retain current inside basis plus basis for 2014 growth
capex
Annual tax depreciation on asset step-up calculated using a straight-line -13.7-Year schedule (2)
Confidential
•
• Annual tax depreciation on growth and maintenance capex and current inside basis calculated using a 15-Year MACRs
schedule
• EPC EBITDA and related maintenance capex split into Citrus and NGPL cash flows and shielded 80%
■ Plantation dividends of $60 million and shielded 70%
. $4 million of KMI sustaining capex, 100% expensed for tax purposes
. Includes $360 million per year of remedial income for tax purposes
Assumes 36.5% tax rate
Source Management estimates
2 Assumes approximately 13 7 years of depreciable ife, which is the average life of the various components that make-up the depreciable base. The actual depreciable ife will vary when the
depreciable base allocation is completed
BARCLAYS
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