Equitrans Midstream to Eliminate Incentive Distribution Rights
February 14 2019 - 6:25AM
Business Wire
Equitrans Midstream Corporation (NYSE: ETRN), EQM Midstream
Partners, LP (NYSE: EQM), and certain of their affiliates today
announced that they have entered into a definitive agreement to
exchange and eliminate the EQM Incentive Distribution Rights (IDRs)
and restructure the economic general partner interest in EQM. As
outlined, the agreement exchanges the IDRs for 80 million newly
issued EQM common units and 7 million newly issued EQM Class B
units, both representing limited partner interests in EQM; and
provides ETRN a non-economic general partner interest in EQM (IDR
Elimination Transaction).
The EQM Class B units are not entitled to receive cash
distributions from EQM until they become convertible into EQM
common units. At the holder’s option, the Class B units will be
convertible into EQM common units in three tranches: 2.5 million
units convertible on April 1, 2021; 2.5 million units convertible
on April 1, 2022; and 2 million units convertible on April 1, 2023.
The IDR Elimination Transaction is subject to the satisfaction or
waiver of certain customary conditions and is expected to close in
February 2019, at which time ETRN will beneficially own
approximately 60% of the limited partner interest in EQM. Following
the transaction, EQGP Holdings, LP will be a wholly owned
subsidiary of EQM. The boards of directors of ETRN and EQM, as well
as the EQM Conflicts Committee, have unanimously approved the IDR
Elimination Transaction.
“The elimination of the IDRs is another step in removing the
financial complexity in our structure and fully aligns ETRN and EQM
moving forward,” said Thomas F. Karam, chief executive officer of
ETRN and EQM. “By utilizing the Class B units, EQM will benefit
from an enhanced financial position, providing the flexibility
needed for completing several large growth projects; and ETRN will
hold a 60% ownership interest in EQM.”
The IDR Elimination Transaction is expected to be accretive to
EQM distributable cash flow per unit beginning in 2021.
Advisors to the IDR Elimination Transaction
Guggenheim Securities, LLC and Goldman Sachs & Co. LLC acted
as financial advisors and Baker Botts L.L.P. acted as legal advisor
to ETRN. Evercore acted as financial advisor and Richards, Layton
& Finger, P.A. acted as legal advisor to the Conflicts
Committee of EQM.
About Equitrans Midstream Corporation
Equitrans Midstream Corporation (ETRN) has a premier asset
footprint in the Appalachian Basin and is one of the largest
natural gas gatherers in the United States. With a rich 135-year
history in the energy industry, ETRN was launched as a standalone
company in 2018 and, through its subsidiaries, has an operational
focus on gas gathering systems, transmission and storage systems,
and water services assets that support natural gas producers across
the Basin. ETRN is helping to meet America’s growing need for
clean-burning energy, while also providing a rewarding workplace
and enriching the communities where its employees live and work.
ETRN owns the general partner interest, the incentive distribution
rights, and a 30.6% limited partner interest in EQM.
For more information on Equitrans Midstream Corporation, visit
www.equitransmidstream.com
About EQM Midstream Partners
EQM Midstream Partners, LP (EQM) is a growth-oriented limited
partnership formed to own, operate, acquire, and develop midstream
assets in the Appalachian Basin. As one of the largest gatherers of
natural gas in the United States, EQM provides midstream services
to producers, utilities, and other customers through its
strategically located natural gas transmission, storage, and
gathering systems, and water services to support energy development
and production in the Marcellus and Utica regions. EQM owns
approximately 950 miles of FERC-regulated interstate pipelines and
approximately 2,200 miles of high- and low-pressure gathering
lines.
For more information on EQM Midstream Partners, LP, visit
www.eqm-midstreampartners.com
Cautionary Statements
Disclosures in this news release contain certain forward-looking
statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended, and Section 27A of the Securities
Act of 1933, as amended. Statements that do not relate strictly to
historical or current facts are forward-looking. Without limiting
the generality of the foregoing, forward-looking statements
contained in this news release specifically include the
satisfaction or waiver of any conditions to closing the IDR
Elimination Transaction; the expected closing of the IDR
Elimination Transaction and ETRN’s ultimate ownership percentage of
the limited partner interest in EQM following the closing of the
IDR Elimination Transaction. These statements involve risks and
uncertainties that could cause actual results to differ materially
from projected results. Accordingly, investors should not place
undue reliance on forward-looking statements as a prediction of
actual results. ETRN and EQM have based these forward-looking
statements on current expectations and assumptions about future
events. While ETRN and EQM consider these expectations and
assumptions to be reasonable, they are inherently subject to
significant business, economic, competitive, regulatory and other
risks and uncertainties, many of which are difficult to predict and
beyond ETRN’s control. The risks and uncertainties that may affect
the operations, performance and results of ETRN’s and EQM’s
business and forward-looking statements include, but are not
limited to, those set forth under (i) Item 1A, “Risk Factors” of
ETRN’s Form 10 registration statement filed with the Securities and
Exchange Commission (SEC) and Item 1A, “Risk Factors” of ETRN’s
Form 10-K for the year ended December 31, 2018 to be filed with the
SEC, and (ii) Item 1A, “Risk Factors” of EQM’s Form 10-K for the
year ended December 31, 2017 as filed with the SEC and Item 1A,
“Risk Factors” of EQM’s Form 10-K for the year ended December 31,
2018 to be filed with the SEC, in each case as may be updated by
any subsequent Form 10-Qs.
Any forward-looking statement speaks only as of the date on
which such statement is made and ETRN and EQM do not intend to
correct or update any forward-looking statement, whether as a
result of new information, future events or otherwise.
Source: Equitrans Midstream Corporation
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version on businesswire.com: https://www.businesswire.com/news/home/20190214005127/en/
Analyst/Investor inquiries:Nate TetlowVice President,
Corporate Development and Investor
Relations412-553-5834ntetlow@equitransmidstream.com
Media inquiries:Natalie A. CoxDirector, Corporate
Communications412-395-3941ncox@equitransmidstream.com
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