PITTSBURGH--(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
View source version on businesswire.com:
https://www.businesswire.com/news/home/20190214005127/en/
Analyst/Investor inquiries:
Nate Tetlow
Vice
President, Corporate Development and Investor Relations
412-553-5834
ntetlow@equitransmidstream.com
Media inquiries:
Natalie A. Cox
Director,
Corporate Communications
412-395-3941
ncox@equitransmidstream.com
Source: Equitrans Midstream Corporation