Item 1.01
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Entry into a Material Definitive Agreement.
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Agreement and Plan of Merger
NuStar Energy L.P., a Delaware limited partnership (the Partnership), has entered into an Agreement and Plan of Merger, dated as of
February 7, 2018 (the Merger Agreement), by and among the Partnership, Riverwalk Logistics, L.P., a Delaware limited partnership and the general partner of the Partnership (the General Partner), NuStar GP, LLC, a
Delaware limited liability company and the general partner of the General Partner (NuStar GP), Marshall Merger Sub LLC, a Delaware limited liability company and a wholly owned subsidiary of the Partnership (Merger Sub),
NuStar GP Holdings, LLC, a Delaware limited liability company (NSH) and Riverwalk Holdings, LLC, a Delaware limited liability company and a wholly owned subsidiary of NSH. Pursuant to the Merger Agreement, Merger Sub will merge with and
into NSH with NSH being the surviving entity, such that following the merger the Partnership will be the sole member of NSH (the Merger).
The terms of the Merger Agreement were unanimously approved by the Conflicts Committee (NSH Conflicts Committee) of the board of
directors of NSH (the NSH Board) and the Nominating/Governance & Conflicts Committee (the NuStar GP Conflicts Committee) of the board of directors of NuStar GP (the NuStar GP Board), each comprised solely
of independent directors, and were approved by the NSH Board and NuStar GP Board, with Mr. William E. Greehey (Mr. Greehey) and Mr. Bradley C. Barron recusing themselves.
Pursuant to the Merger Agreement and at the effective time of the Merger, the Sixth Amended and Restated Agreement of Limited Partnership of
the Partnership shall be amended and restated, substantially in the form attached as Annex A to the Merger Agreement (Seventh Amended and Restated Partnership Agreement), to, among other things, (i) cancel the incentive distribution
rights held by the General Partner, (ii) convert the 2.0% general partner interest in the Partnership held by the General Partner into a
non-economic
management interest and (iii) provide the holders
of common units representing limited partner interest in the Partnership (Partnership Common Units) with voting rights in the election of directors of the board of directors of NuStar GP.
At the effective time of the Merger Agreement, each outstanding unit representing a membership interest in NSH (NSH Unit), other
than NSH Units held by NSH or its subsidiaries, will be converted into the right to receive 0.55 of a Partnership Common Unit. All NSH Units, when converted, shall cease to be outstanding and shall automatically be cancelled and no longer exist. No
fractional Partnership Common Units will be issued in the Merger; instead, each holder of NSH Units otherwise entitled to receive a fractional Partnership Common Unit will receive cash in lieu of such fractional Partnership Common Unit. Furthermore,
the 10,214,626 Partnership Common Units currently owned by subsidiaries of NSH will be cancelled by the Partnership and will cease to exist.
The Merger Agreement contains customary representations and warranties and covenants by each of the parties. Completion of the Merger is
conditioned upon, among other things: (i) approval of the Merger Agreement by the affirmative vote of holders of a Unit Majority, as defined in the Second Amended and Restated Limited Liability Company Agreement of NSH, as amended (NSH
Unitholder Approval); (ii) the effectiveness of a registration statement on Form
S-4
with respect to the issuance by the Partnership of the Partnership Common Units in connection with the Merger;
(iii) the absence of certain legal injunctions or impediments prohibiting the transactions; (iv) the receipt of certain tax opinions from a nationally recognized tax counsel; and (v) the approval for the listing of the Partnership
Common Units on the New York Stock Exchange.
The Merger Agreement contains provisions granting both the Partnership and NSH the right to
terminate the Merger Agreement for certain reasons, including, among others (i) by mutual consent of the Partnership and NSH; (ii) by either party if the Merger has not been consummated on or before August 8, 2018; (iii) if certain
changes in rules or regulations prohibits the consummation of the Merger; (iv) if NSH fails to obtain NSH Unitholder Approval; or (v) if a breach of, or an inaccuracy in, the representations or warranties is not cured within thirty days.
Furthermore, the Partnership may terminate the Merger Agreement in the event that, prior to NSH Unitholder Approval, NSH has intentionally and materially breached the
non-solicitation
covenants in the Merger
Agreement or the NSH Board issues a change of recommendation pursuant to the terms of the Merger Agreement and NSH may terminate the Merger Agreement in order to accept a Superior Proposal (as defined in the Merger Agreement) so long as NSH
(i) has not intentionally and materially breached certain provisions of the Merger Agreement and (ii) has paid the Partnership a termination fee.
After the Merger, the NuStar GP Board is expected to consist of nine members. Prior to the distribution of the Proxy Statement, NSH shall
designate the three members of the NSH Conflicts Committee to serve as members of the NuStar GP Board and the six members of the NuStar GP Board immediately prior to the effective time of the merger shall continue to serve as members of the NuStar
GP Board following the effective time of the Merger.
Support Agreement
The Partnership has entered into a Support Agreement, dated as of February 7, 2018 (the Support Agreement), by and among the
Partnership, Merger Sub, WLG Holdings, LLC, a Texas limited liability company (WLG Holdings), Mr. Greehey (Mr. Greehey and WLG Holdings, together, the Unitholders) and, for limited purposes stated therein, NSH,
pursuant to which the Unitholders have agreed to vote in favor of the approval and adoption of the Merger Agreement, the approval of the Merger and any other action required in furtherance thereof submitted for the vote or written consent of NSH
Unitholders. The Support Agreement will terminate at (i) the effective time of the Merger, (ii) upon the termination of the Merger Agreement or (iii) if, by written agreement, the Unitholders and the Partnership terminate the Support
Agreement.