Item 1.01 Entry into a Material Definitive Agreement.
Purchase and Sale Agreement
On September 27,
2016, Shell Midstream Partners, L.P. (the Partnership) entered into a Purchase and Sale Agreement (the Purchase Agreement) with Shell Pipeline Company LP (SPLC), Equilon Enterprises LLC d/b/a Shell Oil Products US
(SOPUS) and Shell Midstream Operating LLC (Operating), a wholly owned subsidiary of the Partnership, to acquire a 49.0% interest in Odyssey Pipeline L.L.C. and an additional 20.0% interest in Mars Oil Pipeline Company for
$350 million (the Acquisition). The Partnership expects to fund the Acquisition with cash on hand and borrowings under its Five Year Revolver (as defined below). The Acquisition is expected to close on or about October 3, 2016,
subject to customary closing conditions.
The Purchase Agreement contains customary representations, warranties and covenants of SPLC, SOPUS, the
Partnership and Operating. SPLC and SOPUS, on the one hand, and the Partnership and Operating, on the other hand, have agreed to indemnify each other and their respective affiliates, officers, directors and other representatives against certain
losses resulting from any breach of their representations, warranties or covenants contained in the Purchase Agreement, subject to certain limitations and survival periods.
As of September 27, 2016, the Partnership had 109,842,376 common units outstanding, of which 88,367,308 were publicly owned. SPLC, through its ownership of
common units, subordinated units and the general partner units, owned 51.2% of the Partnership. As of September 27, 2016, SPLCs wholly owned subsidiary, Shell Midstream LP Holdings LLC, owned 21,475,068 common units and 67,475,068
subordinated units in the Partnership. SPLC also owned a 100% interest in Shell Midstream Partners GP LLC, the general partner (the General Partner) of the Partnership, which in turn owned 3,618,723 general partner units, representing a
2% general partner interest, and all of the incentive distribution rights in the Partnership. The terms of the Acquisition were approved by the board of directors of the General Partner (the Board) and by the conflicts committee of the
Board, which consists entirely of independent directors. The conflicts committee engaged an independent financial advisor and legal counsel.
The
foregoing description is not complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
Amendment to Five Year Revolving Credit Agreement
On September 27, 2016, Shell Midstream Partners, L.P. (the Partnership) and Shell Treasury Center (West) Inc. (STCW), an affiliate
of the Partnership, amended and restated the Partnerships amended and restated five year revolving credit facility, dated February 22, 2016 (the Five Year Revolver) to increase the amount of the facility by $360 million to
$760 million. All other material terms and conditions of the Five Year Revolver were unchanged.
The foregoing description is not complete and is
qualified in its entirety by reference to the full text of the amendment and restatement to the Five Year Revolver, which is filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.