NGL Energy Partners LP Closes Combination with Mesquite and Announces Investment from EIG and FS Energy and Power Fund
July 02 2019 - 4:55PM
Business Wire
NGL Energy Partners LP (NYSE:NGL) (the “Partnership” or “NGL”)
today announced the closing of its previously announced acquisition
of all of the assets of Mesquite Disposals Unlimited, LLC
(“Mesquite”) for a total purchase price of $892.5 million on a
cash-free, debt-free basis, a portion of which will be funded in
deferred payments.
“The closing of our Mesquite transaction creates the largest
water disposal system in the Delaware Basin with permitted capacity
exceeding two million barrels per day, but more importantly, the
redundancy required by our customers,” stated Mike Krimbill, NGL’s
CEO. “The combined system provides multiple transportation,
disposal and recycling options throughout Lea and Eddy Counties
that allows NGL to deliver on its commitments. The Mesquite family
will work alongside NGL, operating these assets while expanding the
business with additional facilities and contracts.”
The acquisition purchase price was funded with the following
sources of capital:
- $400 million aggregate gross proceeds from privately placed
equity securities sold for cash to investment funds managed by EIG
Global Energy Partners (“EIG”) and FS Energy and Power Fund
(“FSEP”);
- $100 million of additional NGL preferred units based on market
value of an existing class, issued to certain beneficial owners of
Mesquite as part of the acquisition consideration;
- $250 million gross proceeds from a new 5-year secured term loan
with TD Securities (USA) LLC, as lead arranger and bookrunner, and
The Toronto-Dominion Bank, New York Branch, as initial lender;
and
- Any remaining funding requirements are expected to be paid from
borrowings under the Partnership’s existing revolving credit
facility.
“We are also excited to announce the investment in NGL by EIG,”
stated Mr. Krimbill. “In conjunction with our partnership with EIG,
we welcome Brian Boland to our Board of Directors. We appreciate
EIG’s support in the diligence and financing of this highly
strategic acquisition and look forward to working with Brian and
the EIG team on new opportunities in the near future.”
Brian Boland, Managing Director and Co-head of Midstream at EIG
added, “We are thrilled to be making this investment in NGL and its
diversified, high-quality asset base that includes what we believe
to be the preeminent, multi-basin water solutions platform in the
United States. We expect the acquisition of the Mesquite assets,
together with NGL’s existing footprint in the Northern Delaware
basin, to provide NGL with unmatched scale and capabilities that
will facilitate best-in-class execution for its customers. NGL’s
system is strategically located in the core of the Delaware basin
and is well-positioned to capture significant volume growth as
produced water levels continue to rise alongside rapidly growing
oil production. We look forward to working with the NGL team
towards this next phase of growth for the Partnership and its
stakeholders.”
“Thank you to EIG and to the team at TD Securities for their
support in completing the financing strategy for the closing of the
Mesquite transaction,” stated Trey Karlovich, NGL’s CFO. “Pro forma
for Mesquite’s first year contribution, we were able to complete
this financing while maintaining our 3.25x compliance leverage
target and managing our cost of capital, while maintaining
flexibility around our capital structure and debt maturities.”
Advisors
Barclays acted as financial advisor and placement agent for NGL.
Winston & Strawn LLP acted as legal counsel to NGL on the
Mesquite transaction. Hunton Andrews Kurth LLP and Paul Hastings
LLP served as legal counsel to NGL on the financing transactions.
Kirkland & Ellis LLP acted as legal counsel to EIG and
FSEP.
Forward-Looking Statements
Certain matters contained in this Press Release include
"forward-looking statements." All statements, other than statements
of historical fact, included in this Press Release may constitute
forward-looking statements. Although we believe that the
expectations reflected in these forward-looking statements are
reasonable, we cannot assure you that these expectations will prove
to be correct. These forward-looking statements are subject to
certain known and unknown risks and uncertainties, as well as
assumptions that could cause actual results to differ materially
from those reflected in these forward-looking statements. Factors
that might cause actual results to differ include, but are not
limited to, the risk factors discussed from time to time in each of
our documents and reports filed with the SEC.
Readers are cautioned not to place undue reliance on any
forward-looking statements contained in this Press Release, which
reflect management's opinions only as of the date hereof. Except as
required by law, we undertake no obligation to revise or publicly
release the results of any revision to any forward-looking
statements.
About NGL Energy Partners
LP
NGL Energy Partners LP is a Delaware limited partnership. NGL
owns and operates a vertically integrated energy business with four
primary businesses: water solutions, crude oil logistics, NGL
logistics and refined products/renewables. For further information,
visit the Partnership’s website at www.nglenergypartners.com.
About EIG Global Energy
Partners
EIG Global Energy Partners is a leading institutional investor
to the global energy sector with $22.4 billion under management as
of March 31, 2019. EIG specializes in private investments in energy
and energy-related infrastructure on a global basis. During its
37-year history, EIG has committed over $30.8 billion to the energy
sector through more than 345 projects or companies in 36 countries
on six continents. EIG’s clients include many of the leading
pension plans, insurance companies, endowments, foundations and
sovereign wealth funds in the U.S., Asia and Europe. EIG is
headquartered in Washington, D.C. with offices in Houston, London,
Sydney, Rio de Janeiro, Hong Kong and Seoul. For additional
information, please visit EIG Partners website at
https://www.eigpartners.com/.
About FS Energy and Power
Fund
FS Energy and Power Fund is a publicly registered, non-traded
business development company sponsored by FS Investments and
advised by FS/EIG Advisor, LLC, a joint venture of EIG and FS
Investments. FSEP focuses primarily on investing in the debt and
income-oriented equity securities of privately held U.S. companies
in the energy and power industry. FSEP’s investment objectives are
to generate current income and long-term capital appreciation. FS
Investments is a leading asset manager dedicated to helping
individuals, financial professionals and institutions design better
portfolios. FS Investments had $23.7 billion under management as of
March 31, 2019. Visit www.fsinvestments.com to learn more.
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version on businesswire.com: https://www.businesswire.com/news/home/20190702005683/en/
Trey Karlovich, 918-481-1119 Executive Vice President and Chief
Financial Officer Trey.Karlovich@nglep.com or Linda Bridges,
918-481-1119 Senior Vice President – Finance and Treasurer
Linda.Bridges@nglep.com
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