FOR IMMEDIATE RELEASE

POINTE CAPITAL MANAGEMENT REMARKS ON KINDER MORGAN ANNOUNCEMENT

GROSSE POINTE FARMS, MI (August 2014) - Pointe Capital Management opines on the
significant announcement this week from Rich Kinder, Chairman and CEO of Kinder Morgan, Inc.
In short, it is a very positive development for the energy/MLP industry.
On Sunday, August 10th, Kinder Morgan, Inc. (KMI) announced an agreement to acquire all
outstanding equity securities in and assume all debt of, Kinder Morgan Energy Partners (KMP),
Kinder Morgan Management (KMR) and El Paso Pipeline Partners (EPB). After underperforming
peer group companies for two years (KMI +4%* versus Alerian MLP Index +26%*), Kinder
acknowledged that decelerating LP growth and structural challenges of the MLP units had placed the
entire complex of companies in a disadvantaged position versus peers and opportunities in the energy
infrastructure space. Kinders decision to eliminate this partnership structure and position itself as a
large cap market bellwether has very positive implications for all four entities involved and should
allow the new company (KMI) greater participate in the likely robust expansion of the energy
infrastructure sector through both organic growth and acquisitions.
While the deal will likely trigger a taxable event for KMP and EPB unit holders, the significant
appreciation in those securities will largely offset the taxes due after the deal closes in 4Q.
Subsequently, the higher dividend on the parent company, KMI, and the future growth rate being
accelerated make this a leading edge company in the industry.**
Kinders consolidation will accomplish several positive events:
(1) KMI dividend will rise to $2 per share in 2015, or a 16% rise versus 2014
(2) Future dividend growth is expected to rise 10% annually in the 2015-2020 period
(3) Coverage of the dividend/distribution payments should average a relatively healthy 1.1x
over the next six years
(4) More important, the surviving company expects that the overall cost of capital will drop
significantly due to the elimination of incentive distribution rights, a structural impairment
in all MLPs
(5) KMI estimates that income tax savings will amount to approximately $20 billion over the
next 14 years
(6) KMI will be in a much improved position to acquire other companies in the energy
infrastructure space, largely due to enhanced size, liquidity and lower capital costs
KMI business strategy remains focused on fee-based assets that are core to the growing North
America energy infrastructure space. Further, management will continue to control costs, leverage
asset foot print, maintain a strong balance sheet and remain very transparent to investors.
At Pointe Capital, we view the transaction as very favorable for all units, including the surviving
company. Our strategic focus for our investors-an emphasis on cash flow, yield, distribution growth
and transparency are very consistent with what Kinder is now undertaking.
While Kinder Morgan has always been a leader in business structure, financial management and
execution, we do not expect to see a dramatic change for the MLP space overall. Kinder was unique

63 Kercheval Avenue, Suite 222

Grosse Pointe Farms, MI 48236

pointecapital.com

p.313.882.7100 f. 313.882.8124

in the number of units it had created and the overall benefits of combining under one unit are not
easily replicated by peers. However, we do believe that KMIs move will likely accelerate more
acquisitions in the energy infrastructure space. As a result, we are more convinced than ever that the
MLP and related space remains fertile grounds for alpha generation in the energy space.
About Pointe Capital Management
Pointe Capital Management LLC is an asset manager and Registered Investment Advisor (RIA) with
the Securities Exchange Commission (SEC). Founded by industry veterans in 2010, Pointe Capital
offers investment management and advisory services to a select group of individual and institutional
clients, including high net worth individuals and families, endowments, foundations, municipal
pension plans and private pension plans. The Firm differentiates itself by acting as a stable Fiduciary
and providing capital market solutions for investors through a Modern Approach to Traditional
Investing TM. Pointe Capital Management has offices in Grosse Pointe Farms, Michigan and New
York City. For more information, please contact us at 313.882.7100 or visit
http://www.pointecapitalmanagement.com/.
*Performance data taken from Bloomberg
**Pointe Capital Management does not give tax advice. Pointe Capital Management is simply restating the publically
stated position of Kinder Morgan Inc. regarding the tax consequences of this deal. Please consult with your own tax
advisor regarding your personal position. A link to the public announcement is available here:
http://phx.corporate-ir.net/phoenix.zhtml?c=93621&p=irol-newsArticle&ID=1957206&highlight=
This news release includes forward-looking statements that were released by Kinder Morgan, Inc. These forward-looking
statements are subject to risks and uncertainties and are based on the beliefs and assumptions of management, based on
information available to them at the time. Although Pointe Capital Management takes the position that these forwardlooking statements are based upon reasonable assumptions, based upon information available, we cannot provide assurance
that such assumptions will materialize. Important factors that could cause actual company results to differ materials from
those in the forward-looking statements herein are generally discussed in the particular company's reports filed with the
Securities and Exchange Commission. Forward-looking statements speak only as of the date they were made and except to
the extent required by law, the particular company will undertake no obligation to update or review any forward-looking
statement because of new information, future events or other factors. Because of these uncertainties, readers should not
place undue reliance on these forward-looking statements. Pointe Capital Management remains available for our investment
management clients who wish to review Kinder Morgan, Inc. and actions discussed in this news release.

63 Kercheval Avenue, Suite 222

Grosse Pointe Farms, MI 48236

pointecapital.com

p.313.8827100 f. 313.882.8124