Dominion Midstream to buy Questar Pipeline

Dominion Midstream Partners LP said on Monday it will buy Questar Pipeline LLC for about $1.73 billion including debt from Dominion Resources.

The deal, a dropdown of assets, would partly be financed by Dominion Midstream through a public offering of Dominion Midstream's common units, and includes $435 million of Questar's outstanding debt.

A drop-down transaction is the acquisition of assets by a company, followed by a transfer of those assets to a partnership.

On closing, the acquisition of Questar Pipeline will immediately add to Dominion Midstream's cash flow, and will contribute to a distribution growth rate of 22 percent per year.

The proceeds from the Questar Pipeline dropdown will allow Dominion Resources to pay down debt.

As of December 2015, Dominion Resources' long term debt was $23.61 billion.

Reporting by Vishaka George