Summit Midstream Partners, LP Achieves Lender Support Milestone for SMP Holdings' Term Loan Restructuring & Announces Repurchase of Senior Notes

Rhea-AI Summary

Summit Midstream Partners, LP (NYSE: SMLP) has received consent from over 73% of lenders for a restructuring of its $155.2 million Term Loan. The restructuring will involve a total consideration of $26.5 million in cash and 34.6 million common units to consenting lenders. Additionally, SMLP entered a repurchase agreement to buy back $95.6 million of senior notes at a 32% discount, reducing its debts by approximately $306.5 million since late May 2020. These moves aim to enhance financial stability and accelerate deleveraging, reducing net debt by about $113 million.

Positive

• Secured consent from over 73% of lenders for Term Loan restructuring.
• Reduced senior unsecured debt obligations by approximately $306.5 million since late May 2020, or 38%.
• Accelerated deleveraging, cutting net debt by approximately $113 million.

Negative

• None.

HOUSTON, Oct. 8, 2020 /PRNewswire/ -- Summit Midstream Partners, LP (NYSE: SMLP) announced today that its wholly owned, indirect subsidiary, Summit Midstream Partners Holdings, LLC ("SMP Holdings"), has secured formal consents from lenders collectively holding more than 73% of the $155.2 million outstanding Term Loan under its Term Loan Agreement, dated as of March 21, 2017 (the "Term Loan"), in support of the previously announced consensual Term Loan restructuring transaction (the "TL Restructuring").   The consenting lenders now exceed the minimum threshold to proceed with the remaining conditions to close the TL Restructuring.  SMLP will continue to engage with additional Term Loan lenders who have not yet formally consented to the TL Restructuring over the next week and has initiated the necessary actions to ensure that the SMLP common units provided as partial consideration for the TL Restructuring are freely tradable upon closing. 

As previously announced, the total consideration provided to consenting Term Loan lenders, in return for a full retirement of the $155.2 million Term Loan, will consist of $26.5 million of cash and 34.6 million SMLP common units that are currently owned by SMP Holdings.  The consideration will be allocated among Term Loan lenders as provided in the Transaction Support Agreement and as previously disclosed.  In connection with the closing of the TL Restructuring, which is still anticipated in the fourth quarter of 2020, Term Loan lenders will waive their rights to any and all claims against SMP Holdings and its affiliates, including a release of the non-economic GP Interest in SMLP from its collateral package.

In addition, SMLP announced that subsequent to September 30, 2020, it has entered into a privately negotiated repurchase agreement with a single holder of its 5.75% senior notes due 2025 to repurchase $95.6 million of face value of senior notes at a discount of 32% to par, resulting in the retirement of an additional $30.8 million of outstanding indebtedness.  Since late May 2020, including this privately negotiated repurchase of 5.75% senior notes due 2025, which is scheduled to close on Friday, October 9, 2020, SMLP will have reduced the face value of its senior unsecured debt obligations by approximately $306.5 million, or approximately 38% of the original $800.0 million aggregate par value.  As a result of these initiatives, SMLP has accelerated deleveraging and reduced net debt by approximately $113.0 million, or a 0.39x reduction to SMLP's total leverage ratio based on the terms of SMLP's revolving credit facility and second quarter 2020 LTM EBITDA.

About Summit Midstream Partners, LP

SMLP is a value-driven limited partnership focused on developing, owning and operating midstream energy infrastructure assets that are strategically located in unconventional resource basins, primarily shale formations, in the continental United States.  SMLP provides natural gas, crude oil and produced water gathering services pursuant to primarily long-term and fee-based gathering and processing agreements with customers and counterparties in six unconventional resource basins: (i) the Appalachian Basin, which includes the Utica and Marcellus shale formations in Ohio and West Virginia; (ii) the Williston Basin, which includes the Bakken and Three Forks shale formations in North Dakota; (iii) the Denver-Julesburg Basin, which includes the Niobrara and Codell shale formations in Colorado and Wyoming; (iv) the Permian Basin, which includes the Bone Spring and Wolfcamp formations in New Mexico; (v) the Fort Worth Basin, which includes the Barnett Shale formation in Texas; and (vi) the Piceance Basin, which includes the Mesaverde formation as well as the Mancos and Niobrara shale formations in Colorado.  SMLP has an equity investment in Double E Pipeline, LLC, which is developing natural gas transmission infrastructure that will provide transportation service from multiple receipt points in the Delaware Basin to various delivery points in and around the Waha Hub in Texas.  SMLP also has an equity investment in Ohio Gathering, which operates extensive natural gas gathering and condensate stabilization infrastructure in the Utica Shale in Ohio.  SMLP is headquartered in Houston, Texas.

Forward-Looking Statements

This press release includes certain statements concerning expectations for the future that are forward-looking within the meaning of the federal securities laws.  Forward-looking statements include, without limitation, any statement that may project, indicate or imply future results, events, performance or achievements, such as the completion of the proposed TL Restructuring and the full settlement and termination of the Term Loan, and may contain the words "expect," "intend," "plan," "anticipate," "estimate," "believe," "will be," "will continue," "will likely result," and similar expressions, or future conditional verbs such as "may," "will," "should," "would," and "could."  Forward-looking statements also contain known and unknown risks and uncertainties (many of which are difficult to predict and beyond management's control) that may cause SMLP's actual results in future periods to differ materially from anticipated or projected results.  An extensive list of specific material risks and uncertainties affecting SMLP is contained in its 2019 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 9, 2020, Quarterly Report on Form 10-Q for the three months ended March 31, 2020 filed with the Securities Exchange Commission on May 8, 2020, and Quarterly Report on Form 10-Q for the three months ended June 30, 2020 filed with the Securities Exchange Commission on August 10, 2020, each as amended and updated from time to time. Any forward-looking statements in this press release, are made as of the date of this press release and SMLP undertakes no obligation to update or revise any forward-looking statements to reflect new information or events.

SMLP is actively engaging in various liability management transactions, including the TL Restructuring discussed above and the recently consummated cash tender offers for its outstanding senior notes. SMLP intends to continue to evaluate other liability management initiatives, as well as potential asset sales or other divestitures of assets. There is no assurance that any of these asset sales or other divestitures will be completed. Other liability management initiatives may involve amendments to SMLP's revolving credit facility and/or additional repurchases of senior notes through open market purchases, privately negotiated transactions, redemptions, additional tender offers, exchange offers or otherwise.

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SOURCE Summit Midstream Partners, LP

FAQ

What is the purpose of the Term Loan restructuring for SMLP?

The Term Loan restructuring aims to enhance financial stability by reducing SMLP's debt obligations and improving cash flow.

What amount is being repurchased in SMLP's senior notes buyback?

SMLP is repurchasing $95.6 million of senior notes due 2025 at a 32% discount.

How much total debt has SMLP reduced since May 2020?

Since late May 2020, SMLP has reduced total debt by approximately $306.5 million.

What is the expected impact of the buyback and restructuring on SMLP's stock price?

The buyback and restructuring are expected to improve SMLP's financial health, potentially leading to a positive impact on its stock price.