Summit Midstream Partners, LP closes acquisition of Summit Midstream Partners, LLC

Concurrent with the closing of the GP Buy-in Transaction, ECP loaned the full US$35 million of cash proceeds to SMLP under a first-lien senior secured credit agreement, which will bear interest at 8.0% per annum and mature on 31 March, 2021 (the ECP Loan). SMLP intends to utilise the proceeds of the ECP Loan to enhance its liquidity position and for general corporate purposes. The acquisition results in a more simplified corporate structure whereby Summit Investments, and all of its subsidiaries, became wholly owned subsidiaries of SMLP, and SMLP will be governed by a board consisting of a majority of independent directors.

Summit Investments owns 100% of Summit Midstream Partners Holdings, LLC (SMP Holdings), which owns:

• 100% of the GP.
• 45.3 million SMLP common units.
• US$180.75 million deferred purchase price obligation (DPPO) receivable.

SMP Holdings will continue as the borrower under an existing US$158.2 million term loan which matures in May 2022 and is secured by approximately 34.6 million SMLP common units owned by SMP Holdings and the GP interest. The acquired entities, including Summit Investments and SMP Holdings, are unrestricted subsidiaries under SMLP's senior notes indentures, and are not guarantors or restricted subsidiaries under SMLP's revolving credit facility.

Following closing of the GP Buy-in Transaction, SMLP plans to retire 16.6 million SMLP common units that represent approximately 17.5% of the total SMLP common units outstanding immediately preceding the closing of the GP Buy-in Transaction. In addition, the remaining 34.6 million SMLP common units that are pledged as collateral under the SMP Holdings term loan will not be considered ‘outstanding’ units under the Fourth Amended and Restated Agreement of Limited Partnership of SMLP (the Amended Partnership Agreement), so long as they are held by SMLP or one of its subsidiaries. As such, following the closing of the GP Buy-in Transaction, the approximately 43.3 million SMLP common units owned by SMLP's public unitholders will constitute 100% of the outstanding SMLP common units for purposes of voting and distributions.

Heath Deneke, President and Chief Executive Officer, commented, "The closing of the GP Buy-in Transaction represents a key milestone in SMLP's transformation. Together with an independent and fully aligned Board, SMLP's management team is focused on generating long-term unitholder value while providing safe, reliable and efficient service for our customers. SMLP is taking control of its future with this transaction, which will enable it to continue to prioritise the balance sheet by reducing debt, controlling costs, increasing financial flexibility and improving credit metrics in today's volatile market. This transaction has already facilitated the suspension of our common and preferred distributions which will result in the retention of approximately US$76 million of cash that otherwise would have been distributed out of the business. Through its ownership in SMP Holdings, SMLP now indirectly owns and controls the US$180.75 million DPPO receivable which we intend to address in a manner that maximises value for SMLP's stakeholders. In addition, immediately following closing of the transaction, the number of SMLP's common units outstanding will be reduced by 54.2%, which materially increases the equity value on a per-unit basis for our public unitholders."

Read the article online at: https://www.worldpipelines.com/business-news/01062020/summit-midstream-partners-lp-closes-acquisition-of-summit-midstream-partners-llc/