Magellan Midstream to Simplify Capital Structure
March 03 2009 - 6:27PM
PR Newswire (US)
TULSA, Okla., March 3 /PRNewswire-FirstCall/ -- Magellan Midstream
Partners, L.P. (NYSE:MMP) and Magellan Midstream Holdings, L.P.
(NYSE:MGG) today announced a definitive agreement to simplify their
capital structure by transforming the incentive distribution rights
and approximate 2% economic interest of MMP's general partner into
MMP common units. As a result, MGG unitholders will receive 0.6325
MMP common units in exchange for each MGG common unit they own at
closing, representing a 25% premium to today's closing price of
MGG's common units. The simplification also will result in MGG
being dissolved and in MMP owning its general partner, which will
no longer have an economic interest in MMP. The simplification
benefits both sets of unitholders by: -- Effectively lowering MMP's
cost of capital, allowing it to be more competitive for potential
future acquisitions and expansion projects; -- Maintaining MMP's
strong balance sheet and liquidity through 100% equity
consideration; -- Simplifying the current organizational structure,
which should make MMP more attractive to a broader investor base;
and -- Reducing administrative costs associated with a second
publicly traded entity. Management's current projections indicate
that the simplification will be dilutive to MMP's distributable
cash flow per unit initially by about 4% but is expected to provide
long-term accretion to unitholders. Based on these projections,
management believes that MMP should be able to maintain its current
quarterly distribution rate of 71 cents per MMP unit in 2009 and
potentially increase distributions in 2010. MMP's management team
will continue in their respective roles. Additionally, three
independent members of the board of directors of MGG's general
partner will join the board of directors of MMP's general partner
following completion of the simplification, filling the three
director seats that are currently open. The terms of the
simplification agreement were unanimously approved by the conflicts
committee of the board of directors of each partnership's general
partner. Each conflicts committee is comprised solely of
independent directors and was previously delegated authority to
negotiate and authorize the terms of the simplification. The
simplification is expected to be consummated in the third quarter
of 2009, subject to customary closing conditions including approval
of the unitholders of MMP and MGG. Financial advisors, who provided
fairness opinions, for the simplification are Tudor, Pickering,
Holt & Co. Securities, Inc. for the conflicts committee of the
board of directors of MMP's general partner and Lazard for the
conflicts committee of the board of directors of MGG's general
partner. MMP and MGG will host a conference call on Wed., March 4,
at 11 a.m. Eastern to discuss the proposed simplification. To
participate in the call, please dial (888) 254-2821 and provide
code 4352598. Investors also may listen to the call via MMP's
website at http://www.magellanlp.com/webcasts.asp and MGG's website
at http://www.mgglp.com/webcasts.asp. Audio replays of the
conference call will be available from 2 p.m. Eastern on March 4
through midnight on March 10. To access the replay, dial (888)
203-1112 and provide code 4352598. The replay also will be
available at http://www.magellanlp.com/ and http://www.mgglp.com/.
About Magellan Midstream Partners, L.P. Magellan Midstream
Partners, L.P. (NYSE:MMP) is a publicly traded partnership formed
to own, operate and acquire a diversified portfolio of energy
assets. MMP primarily transports, stores and distributes refined
petroleum products. More information is available at
http://www.magellanlp.com/. About Magellan Midstream Holdings, L.P.
Magellan Midstream Holdings, L.P. (NYSE:MGG) is a publicly traded
partnership formed to own the general partner interest and 100% of
the incentive distribution rights in MMP. More information is
available at http://www.mgglp.com/. MMP and MGG will file a joint
proxy statement/prospectus and other documents with the Securities
and Exchange Commission ("SEC") in relation to the simplification.
Investors and security holders are urged to read these documents
carefully when they become available because they will contain
important information regarding MMP, MGG and the simplification. A
definitive joint proxy statement/prospectus will be sent to
unitholders of MMP and MGG seeking their approvals as contemplated
by the simplification agreement. Once available, investors and
security holders may obtain a free copy of the joint proxy
statement/prospectus and other documents containing information
about MMP and MGG, without charge, at the SEC's website at
http://www.sec.gov/. Copies of the joint proxy statement/prospectus
and the SEC filings that will be incorporated by reference in the
joint proxy statement/prospectus may also be obtained free of
charge by contacting investor relations at (918) 574-7650, or by
accessing http://www.magellanlp.com/ or http://www.mgglp.com/. MMP,
MGG and the officers and directors of the general partner of each
partnership may be deemed to be participants in the solicitation of
proxies from their security holders. Information about these
persons can be found in the annual report and proxy statement for
each partnership as filed with the SEC, and additional information
about such persons may be obtained from the joint proxy
statement/prospectus when it becomes available. This document shall
not constitute an offer to sell or the solicitation of an offer to
buy any securities, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the
requirements of the Securities Act of 1933, as amended. This
document includes "forward-looking statements" within the meaning
of federal securities laws. All statements other than statements of
historical facts included or incorporated herein may constitute
forward-looking statements. Actual results could vary significantly
from those expressed or implied in such statements and are subject
to a number of risks and uncertainties. Although MMP and MGG
believe that the expectations reflected in the forward-looking
statements are reasonable, MMP and MGG can give no assurance that
such expectations will prove to be correct. The forward-looking
statements involve risks and uncertainties that affect MMP's and
MGG's operations, financial performance and other factors as
discussed in their filings with the SEC. Among the factors that
could cause results to differ materially are the failure to receive
approval of the simplification by MMP's and MGG's unitholders,
whether and when the simplification is consummated as well as those
risks discussed in the Annual Report on Form 10-K for the year
ended December 31, 2008 for each of MMP and MGG, as filed with the
SEC. You are urged to carefully review and consider the cautionary
statements and other disclosures made in those filings,
specifically those under the heading "Risk Factors." MMP and MGG do
not undertake any duty to update any forward-looking statement.
Contact: Paula Farrell (918) 574-7650
http://www.newscom.com/cgi-bin/prnh/20031107/DAMAGELOGO
http://www.newscom.com/cgi-bin/prnh/20060201/DAW022LOGO
http://photoarchive.ap.org/ DATASOURCE: Magellan Midstream
Partners, L.P.; Magellan Midstream Holdings, L.P. CONTACT: Paula
Farrell of Magellan Midstream Partners, L.P. and Magellan Midstream
Holdings, L.P., +1-918-574-7650, Web Site:
http://www.magellanlp.com/
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