Item 1.01
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Entry into a Material Definitive Agreement.
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Interest Purchase Agreement
On
October 1, 2018, BP Midstream Partners LP (the Partnership) entered into an Interest Purchase Agreement (the Interest Purchase Agreement) with BP Products North America Inc. (BP Products), BP Offshore
Pipelines Company LLC (BP Offshore), and BP Pipelines (North America) Inc. (BP Pipelines and together with BP Products and BP Offshore, the Contributors), to acquire (i) an additional 45.0% interest in Mardi
Gras Transportation System Company LLC, a Delaware limited liability company (Mardi Gras), from BP Pipelines, (ii) a 25.0% interest in KM Phoenix Holdings LLC, a Delaware limited liability company (KM Phoenix), from BP
Products, and (iii) a 22.6916% interest in URSA Oil Pipeline Company LLC, a Delaware limited liability company (Ursa), from BP Offshore, in exchange for aggregate consideration of $468.0 million (the Acquisition),
funded with borrowings under the Partnerships revolving credit facility.
The Interest Purchase Agreement contains customary
representations, warranties and covenants of the Contributors and the Partnership. The Contributors, on the one hand, and the Partnership, on the other hand, have agreed to indemnify each other and their respective affiliates, officers, directors
and other representatives against certain losses, including those resulting from any breach of their representations, warranties or covenants contained in the Interest Purchase Agreement, subject to certain limitations and survival periods.
The terms of the Acquisition were approved by the conflicts committee of the board of directors of the Partnerships general partner,
which consists entirely of independent directors. The conflicts committee engaged an independent financial advisor and legal counsel to assist in evaluating and negotiating the terms of the Acquisition.
In addition, in connection with the Acquisition, and pursuant to the terms of the Partnerships Omnibus Agreement dated as of
October 30, 2017, by and among BP Pipelines, the Partnership, the Partnerships general partner, and, solely for purposes of Articles 4 and 6 thereof, BP America Inc., a Delaware corporation (the Omnibus
Agreement), BP Pipelines has determined, and the general partner has approved, acting in good faith, that the BP Administrative Fee (as defined in the Omnibus Agreement) will be increased from $13.3 million per year to $14.6 million
per year, effective as of January 1, 2020.
Immediately prior to the closing of the Acquisition, BP Pipelines wholly owned
subsidiary, BP Midstream Partners Holdings LLC (BP Holdco), owned 4,581,177 common units representing limited partner interests in the Partnership and 52,375,535 subordinated units representing limited partner interests in the
Partnership, representing an aggregate 54.4% limited partner interest. BP Holdco also owns a 100% interest in BP Midstream Partners GP LLC, a Delaware limited liability company and the general partner, which in turn owns all of the incentive
distribution rights in the Partnership. The general partner, BP Holdco and the Contributors are all wholly owned subsidiaries of BP p.l.c. (together with its subsidiaries, BP). In addition, certain officers of BP also serve as officers
and/or directors of the Partnership.
The foregoing description is not complete and is qualified in its entirety by reference to the full
text of the Interest Purchase Agreement, which is filed as Exhibit 10.1 to this Current Report on Form
8-K
and incorporated herein by reference.