AEU and AEM announce closing of Utica and Marcellus acquisitions

American Energy – Utica, LLC (AEU), an affiliate of American Energy Partners, LP (AELP), has announced that it has closed on its acquisition of approximately 27 000 net acres of leasehold in Monroe County, Ohio from East Resources, Inc. and an unnamed private company (together, the Sellers) for US$ 475 million. The acquisition was partially financed by issuing US$ 250 million of convertible subordinated notes to the Sellers, with the balance paid using available cash.

AEU has raised US$ 1.206 billion in private equity capital since its inception in September 2013, ofwhich approximately 71% was provided by lead investor The Energy & Minerals Group (EMG),which also holds a majority of the AEU Board seats. Additional equity capital was provided byFirst Reserve, AEU’s management team and others. The transactions completed today bringthe total capital raised by AEU to approximately US$ 3.156 billion.

In addition, a separate AELP platform company, American Energy – Marcellus, LLC (AEM),announced today that it has closed on its acquisition of approximately 48 000 net acres ofleasehold in Doddridge, Harrison, Marion, Tyler and Wetzel Counties, West Virginia, also fromthe Sellers, for US$ 1.275 billion.

Concurrently, AEM closed its offering of US$ 750 million and US$ 450 million of senior secured first andsecond lien term loans due 2020 and 2021, respectively. A portion of the net proceeds from theterm loans was used to consummate the acquisition, while the remaining net proceeds will beused to fund capital expenditures to develop the acreage and for general corporate purposes.The acquisition was also partially financed by funding US$ 425 million of private equitycommitments totalling approximately US$ 600 million, of which approximately 72% was provided bylead investor EMG, which also holds a majority of the AEM Board seats. Additional equitycapital was provided by First Reserve, AEM’s management team and others. The transactionscompleted today bring the total capital raised by AEM to US$ 1.8 billion.

Citigroup Global Markets Inc. and Goldman, Sachs & Co. acted as financial advisors to AEUand AEM on the acquisitions. Sullivan & Cromwell LLP, Commercial Law Group, P.C. andPorter Hedges LLP acted as legal advisors to AEU and AEM on the acquisitions. Jefferies LLCacted as exclusive financial advisor to the Sellers and Baker Botts L.L.P. and Kirkland & EllisLLP acted as legal advisors to the Sellers.

Citigroup Global Markets Inc., Credit Suisse, and Jefferies Finance were joint lead arrangers forthe AEM term loans. Sullivan & Cromwell LLP acted as legal advisor to AEM in connection withthe term loans and Latham & Watkins LLP acted as legal advisor to the term loan underwriters.

Adapted from press release by Hannah Priestley-Eaton

Read the article online at: https://www.worldpipelines.com/business-news/07082014/aeu-and-aem-announce-closing-of-utica-and-marcellus-acquisitions/