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EnLink Midstream to acquire EnLink Midstream Partners

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World Pipelines,

The EnLink Midstream companies, EnLink Midstream, LLC (ENLC) (General Partner) and EnLink Midstream Partners, LP (ENLK) (Master Limited Partnership), have announced that they entered into a merger agreement whereby ENLC will acquire all outstanding common units of ENLK not already owned by ENLC in a unit-for-unit exchange transaction to simplify its corporate structure. The transaction is expected to close in 1Q19, and upon closing, EnLink will continue to operate as ENLC, a leading midstream energy provider with diversified service offerings across key supply basins and demand regions in the US.

At closing, the pro forma company will retain the name EnLink Midstream, LLC and will continue to trade on the New York Stock Exchange as ENLC. Under the terms of the merger agreement, ENLK common unitholders will be entitled to receive 1.15 common units of PF ENLC for each common unit of ENLK owned. In connection with the transaction, ENLC's incentive distribution rights (IDRs) in ENLK will be eliminated.

The transaction was approved by the Conflicts Committees and Boards of Directors of both ENLC and ENLK.

Expected transaction benefits:

  • Creates a US$13 billion enterprise value company upon closing.
  • Simplifies the organisational structure into a single, larger publicly traded midstream energy company, increasing the public float and enhancing trading liquidity.
  • Improves project returns with a lower cost of capital for the pro forma entity.
  • Delivers immediate accretion to distributable cash flow (DCF) per unit for both ENLC and ENLK unitholders. Distributable cash flow (DCF) is a non-GAAP measure and is explained in greater detail under "Non-GAAP Financial Information."
  • Expected to provide low double-digit, DCF-per-unit growth through 2021.
  • Reflects EnLink's ongoing commitment to investment-grade-style credit metrics.
  • All three credit rating agencies are expected to reaffirm current ratings.
  • Drives significant improvement in distribution coverage to 1.3x to 1.5x through 2021, and results in excess of US$700 million of cumulative retained cash flow over the same period, supporting EnLink's plans to self-fund the equity portion of a majority of growth capital expenditures.
  • Results in sustainable distribution growth of 5% or greater annually for at least three years.
  • Provides 1099 tax form, and PF ENLC is expected to pay minimal cash federal income taxes through at least 2023.

"EnLink has been on a journey to evolve for long-term success. Today, we took another right step in our journey through the announcement of our simplification transaction, which will be immediately accretive to both ENLC and ENLK common unitholders," said Michael J. Garberding, EnLink President and Chief Executive Officer. "Our business model is unchanged, and we continue to execute on our seven growth strategies. Through this transaction, we will now have a streamlined structure that further strengthens our ability to achieve greater returns on the capital we deploy, allowing us to create lasting value for all our stakeholders."

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