Southcross and Texstar complete combination

Southcross Energy LLC, the former owner of the general partner of Southcross Energy Partners, L.P. (NYSE:SXE), has announced the completion of the previously announced agreement to combine with TexStar Midstream Services, LP, a privately held gas gathering and processing partnership located in the Eagle Ford shale region of South Texas. With the completion of the transaction, a new company, Southcross Holdings LP , now owns 100% of the general partner of Southcross, limited partner interests in Southcross and certain former TexStar assets. EIG Global Energy Partners, Charlesbank Capital Partners and Tailwater Capital each indirectly own approximately one-third of Holdings.

As part of the overall transaction, Southcross has acquired rich gas system assets formerly owned by TexStar for consideration of US$ 80 million in cash, the assumption of US$ 100 million of debt (which was immediately repaid by Southcross’ new term loan facility) and 14 633 000 newly-issued payment-in-kind Class B Southcross convertible units. The rich gas system assets consist of a 300 million ft3/day gas processing facility and over 230 miles of rich gas and residue gas pipelines. The acquisition of the rich gas system assets by Southcross creates a substantial Eagle Ford-focused midstream operation with four gas processing plants, two fractionation facilities and approximately 3000 miles of pipelines.

Holdings owns the Lancaster Gathering System and the NGL System, both originally part of TexStar, as well as an approximate 57% limited partner interest in Southcross and 100% of Southcross’ general partner, which owns a 2% general partner interest in Southcross and Southcross’ incentive distribution rights. Public unitholders own the remaining 43% limited partner interest in Southcross. Assets retained at Holdings are expected to be available as future drop-downs into Southcross. Holdings has no obligation to sell its assets to Southcross and Southcross has no obligation to buy such assets.

“We are excited to announce the completion of the transactions and our improved platform for growth,” said David Biegler, Chairman and Chief Executive Officer of Southcross’ general partner. “The response from our customers has been enthusiastic and we are already beginning to see increased business opportunities. We believe that this commercial momentum, combined with our increased scale and focus in the Eagle Ford, integrated system to Corpus Christi markets, strong financial backing and enhanced operational stability position us well for growth over the near and long-term.”

Adapted from press release by Hannah Priestley-Eaton

Read the article online at: https://www.worldpipelines.com/business-news/05082014/southcross-and-texstar-complete-combination/