Martin Midstream Partners L.P. Issues Statement Reaffirming Commitment to Pending Transaction

Rhea-AI Summary

Martin Midstream Partners L.P. (NASDAQ:MMLP) has reaffirmed its commitment to a pending merger transaction with Martin Resource Management (MRMC). The Conflicts Committee of MMLP's Board of Directors conducted a nine-month evaluation and determined the merger to be fair and in the best interests of MMLP and its unaffiliated unitholders.

The transaction offers $4.02 per common unit, representing a 34% premium to the market closing price before MRMC's initial proposal and an 11.33% premium to the 30-day volume-weighted average price as of October 3, 2024. MMLP rejected alternative proposals from Nut Tree Capital Management and Caspian Capital, stating they were not credible alternatives. The company aims to complete the transaction by the end of 2024.

Positive

• Merger transaction offers a 34% premium to pre-proposal market price
• Deal represents an 11.33% premium to 30-day volume-weighted average price
• $4.02 per common unit valuation for unaffiliated unitholders

Negative

• Rejection of alternative proposals from Nut Tree Capital and Caspian Capital
• Potential conflicts of interest with Nut Tree and Caspian as debt investors with derivative equity exposure

Insights

Financial Analyst

This announcement regarding Martin Midstream Partners L.P.'s (MMLP) reaffirmation of its pending merger with Martin Resource Management (MRMC) is significant for investors. The deal offers $4.02 per common unit, representing a 34% premium to the pre-announcement price and an 11.33% premium to recent trading. This premium valuation could be attractive to current unitholders.

However, the situation is complex due to opposition from Nut Tree Capital Management and Caspian Capital. Their alternative proposals, while rejected, create uncertainty around the deal's completion. The Conflicts Committee's strong defense of the MRMC transaction and criticism of the hedge funds' motives adds another layer of complexity.

Investors should closely monitor unitholder sentiment and potential legal challenges, as these factors could impact the deal's success. The targeted completion by end of 2024 provides a timeline for potential value realization, but also leaves room for further developments in this contested situation.

Legal Expert

The statement from MMLP's Conflicts Committee emphasizes the thoroughness of their nine-month evaluation process, supported by independent advisors. This detail is important from a legal perspective, as it demonstrates adherence to fiduciary duties and proper corporate governance.

The Committee's assertion that the MRMC merger is "fair and reasonable" and "in the best interests" of MMLP and unaffiliated unitholders is key language that aligns with legal standards for such transactions. Their rejection of Nut Tree and Caspian's proposals, particularly noting that the General Partner was not for sale, establishes clear boundaries for the transaction's scope.

Investors should be aware that despite this strong legal positioning, there remains a possibility of unitholder litigation or regulatory scrutiny, which could delay or complicate the merger process. The emphasis on the hedge funds' undisclosed economic interests also suggests potential conflicts that could be subject to further examination.

KILGORE, Texas--(BUSINESS WIRE)-- Martin Midstream Partners L.P. (NASDAQ:MMLP) (“MMLP”) today issued the following statement in response to the press release issued by Nut Tree Capital Management and Caspian Capital:

The Conflicts Committee (the “Conflicts Committee”) of the Board of Directors (the “GP Board”) of Martin Midstream GP LLC, the general partner of MMLP (the “General Partner”), which consists of three independent directors, conducted a thorough nine-month evaluation with the support of independent legal and financial advisors and was diligent about the best path forward for MMLP, including actively considering proposals submitted by Nut Tree Capital Management and Caspian Capital. Following extensive negotiations, the Conflicts Committee unanimously and in good faith determined that the merger transaction with Martin Resource Management Corporation (“MRMC”) is fair and reasonable to, and in the best interests of, MMLP and the unaffiliated holders of the MMLP common units.

The transaction provides an attractive premium valuation to MMLP unitholders, whereby each holder of the common units other than MRMC and its subsidiaries would receive $4.02 per common unit owned, representing a 34.00% premium to the market closing price prior to MRMC’s initial proposal made on May 24, 2024, and an 11.33% premium to the trailing 30-trading day volume-weighted average price as of October 3, 2024, the date the merger agreement was executed.

Notably, the proposals submitted by Nut Tree and Caspian never represented a credible alternative or viable path forward. Further, the Nut Tree and Caspian proposals were predicated on acquiring the General Partner, which was not, and is not, for sale. Importantly, even their own press release noted that the hedge funds have “economic exposure” to MMLP common units, without disclosing any actual ownership. As debt investors in MMLP, with incremental derivative exposure to MMLP equity, Nut Tree’s and Caspian’s interests do not appear to be fully aligned with MMLP unitholders’.

We look forward to engaging with unitholders as we work toward completing the transaction by the end of 2024.

The Conflicts Committee engaged Munsch Hardt Kopf & Harr, P.C., Potter Anderson & Corroon LLP, and Houlihan Lokey, Inc. as its legal and financial advisors. MRMC engaged Baker Botts L.L.P. and Wells Fargo Securities, LLC as its legal and financial advisors.

Forward Looking Statements

This press release includes “forward-looking statements” as defined by the Securities and Exchange Commission (the “SEC”). These forward-looking statements and all references to the transaction described herein rely on a number of assumptions concerning future events and are subject to a number of uncertainties, including (i) the ability of the parties to consummate the transaction in the anticipated timeframe or at all, including MRMC’s ability to fund the aggregate merger consideration; risks related to the satisfaction or waiver of the conditions to closing the transaction in the anticipated timeframe or at all; risks related to obtaining the requisite regulatory approval and MMLP unitholder approval; disruption from the transaction making it more difficult to maintain business and operational relationships; significant transaction costs associated with the transaction; and the risk of litigation and/or regulatory actions related to the transaction, (ii) uncertainties relating to MMLP’s future cash flows and operations, (iii) MMLP’s ability to pay future distributions, (iv) future market conditions, (v) current and future governmental regulation, (vi) future taxation, and (vii) other factors, many of which are outside its control, which could cause actual results to differ materially from such statements. While MMLP believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in anticipating or predicting certain important factors. A discussion of these factors, including risks and uncertainties, is set forth in MMLP’s annual and quarterly reports filed from time to time with the SEC. MMLP disclaims any intention or obligation to revise any forward-looking statements, including financial estimates, whether as a result of new information, future events, or otherwise except where required to do so by law.

About MMLP

Martin Midstream Partners L.P. (NASDAQ: MMLP) headquartered in Kilgore, Texas, is a publicly traded limited partnership with a diverse set of operations focused primarily in the Gulf Coast region of the United States. MMLP’s primary business lines include: (1) terminalling, processing, and storage services for petroleum products and by-products; (2) land and marine transportation services for petroleum products and by-products, chemicals, and specialty products; (3) sulfur and sulfur-based products processing, manufacturing, marketing, and distribution; and (4) marketing, distribution, and transportation services for natural gas liquids and blending and packaging services for specialty lubricants and grease. To learn more, visit www.MMLP.com . Follow Martin Midstream Partners L.P. on LinkedIn, Facebook, and X (formerly known as Twitter).

About MRMC

MRMC, through its various subsidiaries, is an independent provider of marketing and distribution of hydrocarbon and hydrocarbon by-products including asphalt, diesel, natural gas liquids (“NGLs”), crude oil, base and process oils, and other bulk tank liquids. Martin Resource LLC is a wholly owned subsidiary of MRMC that does not engage in any business other than owning 100% of the equity interests in the General Partner. Cross Oil Refining & Marketing, Inc. is a wholly owned subsidiary of MRMC and is engaged in the business of providing base and process oils. Martin Product Sales LLC is a wholly owned subsidiary of MRMC and is engaged in the business of marketing and distributing commodities including asphalt, NGLs, and other petroleum based products.

Important Information about the Proposed Transaction

This material does not constitute an offer to sell or the solicitation of an offer to buy any securities, including the common units or a solicitation of any vote or approval. In connection with the proposed merger, MMLP will file with the SEC and furnish to MMLP’s unitholders a proxy statement and other relevant documents, including a Schedule 13E-3. This material is not a substitute for the Merger Agreement, the proxy statement or the Schedule 13E-3 or for any other document that MMLP may file with the SEC in connection with the proposed transaction. BEFORE MAKING ANY VOTING DECISION, MMLP’S UNITHOLDERS ARE URGED TO READ THE MERGER AGREEMENT, THE PROXY STATEMENT AND THE SCHEDULE 13E-3 AND ANY OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGER OR INCORPORATED BY REFERENCE IN THE PROXY STATEMENT OR SCHEDULE 13E-3 CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER.

Investors and security holders will be able to obtain free copies of the proxy statement (when available) and other relevant documents filed with the SEC by MMLP through the website maintained by the SEC at www.sec.gov . In addition, the proxy statement, the Schedule 13E-3, and other documents filed with the SEC by MMLP will be available free of charge through MMLP’s website at www.MMLP.com , in the “Investor Relations” tab, or by contacting MMLP’s Investor Relations Department at (877) 256-6644.

Participants in the Solicitation

MMLP and the directors and executive officers of our General Partner, and MRMC and its directors and executive officers, may be deemed to be participants in the solicitation of proxies from MMLP’s unitholders in respect of the proposed merger. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of the unitholders of MMLP in connection with the proposed transaction, including a description of their direct or indirect interests, by security holdings or otherwise, will be set forth in the proxy statement and other relevant materials when filed with the SEC. Information about the directors and executive officers of our General Partner and their ownership of MMLP common units is set forth in MMLP’s Form 10-K for the year ended December 31, 2023, as previously filed with the SEC on February 21, 2024. Free copies of these documents may be obtained as described in the paragraphs above.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241022112756/en/

Investor Relations Contact:

Sharon Taylor

Executive Vice President and Chief Financial Officer

(877) 256-6644

ir@mmlp.com

Media Contact:

Andrew Siegel / Melissa Johnson / Jenna Shinderman

Joele Frank

212.355.4449

Source: Martin Midstream Partners L.P.

FAQ

What is the offer price per unit in the MMLP merger transaction?

The offer price is $4.02 per common unit for unaffiliated unitholders of Martin Midstream Partners L.P. (NASDAQ:MMLP).

When is the MMLP merger transaction expected to close?

Martin Midstream Partners L.P. (NASDAQ:MMLP) expects to complete the merger transaction by the end of 2024.

What premium does the MMLP merger offer compared to the pre-proposal price?

The merger offer represents a 34% premium to Martin Midstream Partners L.P.'s (NASDAQ:MMLP) market closing price prior to MRMC's initial proposal on May 24, 2024.

Why did MMLP reject proposals from Nut Tree Capital and Caspian Capital?

MMLP stated that the proposals from Nut Tree Capital and Caspian Capital did not represent credible alternatives or viable paths forward, and were predicated on acquiring the General Partner, which was not for sale.