MERRILLVILLE, Ind. – NiSource Inc. (NYSE: NI) and Columbia Pipeline Group (CPG) executives outlined their respective post-separation business strategies and growth outlooks while confirming additional details of the planned separation May 14.

• NiSource outlined 2016 financial guidance and confirmed a projected average annual 4-6 percent earnings per share and dividend growth rate
• CPG outlined 2015 financial guidance and defined a projected average annual growth rate through 2020 of ~20 percent EBITDA growth and ~15 percent dividend growth
• CPG investment grade credit ratings secured
• Debt recapitalization and refinancing in progress; separation on track for July 1, 2015

NiSource post-separation performance outlook

Following the separation, NiSource will remain one of the largest natural gas utility companies in the United States, serving more than 3.4 million customers in seven states under the Columbia Gas and NIPSCO brands. The company also will continue to provide electric distribution, generation and transmission services for approximately 450,000 NIPSCO electric customers in northern Indiana. NiSource will continue to be headquartered in Merrillville, Indiana, and plans to maintain current levels of community involvement, charitable giving and economic development support following the separation.

NiSource reiterated its commitment to investment grade credit ratings and that it expects to grow earnings and the dividend each by 4-6 percent annually. In 2016, NiSource expects to deliver non-GAAP earnings per share of $1.00-$1.10 with planned infrastructure enhancement opportunities reaching approximately $1.4 billion. Approximately 75 percent of these investments are expected to be focused on revenue-generating investments. The initial annualized dividend is expected to be $0.62 per share, and in aggregate with the expected CPG dividend outlined below, is 7.7 percent higher than the current NiSource dividend.

“As one of the only fully-regulated utilities of our size, supported by approximately $30 billion of expected long-term infrastructure enhancements, NiSource offers a compelling growth investment proposition with significant scale,” NiSource’s post-separation President and Chief Executive Officer (CEO) Joseph Hamrock said. “As our team executes on this well-established, stakeholder-supported and revenue-generating infrastructure strategy, we will continue to enhance safety, reliability and customer service.”

Columbia Pipeline Group post-separation performance outlook

After the separation, CPG will include Columbia Gas Transmission, Columbia Gulf Transmission, Columbia Midstream Group, its ownership in Columbia Pipeline Partners (NYSE: CPPL) (“CPPL”), and other current NiSource natural gas pipeline, storage and midstream holdings. In total, at separation the new public company will operate more than 15,000 miles of natural gas transmission pipelines, nearly 300 billion cubic feet of underground natural gas storage working capacity and a growing portfolio of midstream and related facilities. CPG will be based in Houston and is expected to trade on the New York Stock Exchange under the ticker symbol “CPGX.”

Expected net investment in pipeline, storage and midstream assets is expected to grow from approximately $4.6 billion at the beginning of 2015 to approximately $13.5 billion at year-end 2020. Total capital expenditures from 2016 to 2020 are expected to reach approximately $8.4 billion, of which approximately $4 billion is planned to be funded by the issuance of CPPL equity. Total capital expenditures include maintenance capital of approximately $135 million a year.

The committed project inventory is expected to deliver CPG EBITDA (non-GAAP) of approximately $680 million, excluding separation costs, in 2015, with an average annual growth rate of approximately 20 percent through 2020. As previously announced, the initial annualized dividend is expected to be $0.50 per share, with a targeted average growth rate of approximately 15 percent per year from 2016 to 2020. CPG’s initial coverage from distributable cash flow is expected to be approximately 2.0x, but over time reach a level in line with other high-growth general partner peers.

“With our strategically located assets, a track record of execution, solid investment grade credit ratings and strong liquidity, CPG is positioned for transformational growth,” said Robert C. Skaggs Jr., who will become Chairman and CEO of CPG upon separation. “As we execute on our deep inventory of modernization and growth projects, which are underpinned by long-term, fee-based contracts, we expect to triple our net investment by 2020.”

Debt recapitalization, liquidity and separation update

Earlier this month, Moody’s, Standard & Poor’s and Fitch Ratings confirmed CPG’s investment grade credit ratings of Baa2, BBB- and BBB-, respectively. NiSource’s investment grade credit ratings are expected to be addressed at, or just prior to, the separation.

As part of the debt recapitalization and refinancing process, on May 5, NiSource initiated a tender offer of $750 million dollars in long-term debt, which is scheduled to close in early June. CPG is expected to issue $2.75 billion in long-term debt before the separation, which will be used to fund, in large part, a one-time cash distribution to NiSource and to pay down existing inter-company debt.

“With investment-grade credit ratings secured at CPG, the debt recapitalization process initiated, and solid liquidity platforms in place, we’re on track to complete the separation on July 1,” current NiSource President and CEO Skaggs said. “In early June, the Form 10 is expected to be declared effective by the SEC, and at that time, we’ll also announce and confirm the when-issued trading period, the record date and the distribution date for CPG shares.”

At the separation, NiSource shareholders will retain their current shares of NiSource stock and receive a pro-rata dividend of shares of CPG stock, expected to be at a 1-to-1 ratio. The actual number of CPG shares to be distributed to NiSource shareholders will be determined prior to closing.

The transaction is expected to be tax-free to NiSource and its shareholders, and is subject to various conditions, including final approval by the NiSource board of directors and the U.S. Securities & Exchange Commission (SEC) declaring CPG’s Form 10 Registration Statement effective.