Kinder Morgan Energy Partners has announced the sale of its assets to Tallgrass Energy Partners in a deal worth $3.3bn, following a purchase and sale agreement.

The assets include Kinder Morgan Interstate Gas Transmission (KMIGT), Trailblazer Pipeline Company, the Casper-Douglas natural gas processing and West Frenchie Draw treating facilities in Wyoming, US, as well as the company’s 50% interest in the Rockies Express Pipeline (REX).

Kinder Morgan will receive $1.8bn in cash, including the proportionate amount of REX debt, which is equivalent to $3.3bn.

Barclays and Citi acted as financial advisors to KMP on the deal, which will close in the fourth quarter of 2012, subject to Federal Trade Commission (FTC) approval.

Tallgrass is owned by The Energy & Minerals Group, Kelso & Company and the management team of Tallgrass, including CEO David G. Dehaemers, Jr.

Kinder Morgan (KMI), in March 2012, had reached an agreement with the FTC to divest certain KMP assets in the Rockies in a bid to secure regulatory approval of its acquisition of El Paso Corporation. The El Paso Corporation closed in May 2012.

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Kinder Morgan Energy Partners chairman and CEO Richard D. Kinder said that the company would have preferred to keep all of these assets, however it anticipated divestiture of certain assets in the Rockies to obtain FTC approval.

"Kinder Morgan will receive $1.8bn in cash, including the proportionate amount of REX debt, which is equivalent to $3.3bn."

"I want to thank the employees involved in this transaction for their diligence and hard work. It is very gratifying that Tallgrass is interested in retaining the employees of the entities that will be divested," Kinder said.

Tallgrass Energy Partners CEO David G. Dehaemers Jr said: "The conversion of the Pony Express Pipeline portion of KMIGT into oil service, the seamless transitioning of its gas customers, and placing it in service during the second half of 2014 will be a significant focus for near term growth."

Kinder Morgan Energy Partners acquired 100% of Tennessee Gas Pipeline (TGP) and a 50% interest in El Paso Natural Gas (EPNG) pipeline from KMI, with effect from 1 August.

Proceeds from the sale will be used to repay a $2.0bn credit facility that was issued when KMP acquired TGP and EPNG.