Introduction
This Amendment No. 1 amends and supplements the Transaction Statement on Schedule 13E-3 originally filed on November 21, 2022 (as amended from time to time, this “Transaction Statement”), together with the exhibits hereto, is being jointly filed with the United States Securities and Exchange Commission (the “SEC”) pursuant to Section 13(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 13e-3 thereunder, by (i) Stonepeak Catarina Holdings, LLC, a Delaware limited liability company (“Stonepeak Catarina” and, together with its subsidiaries, other than Evolve (as defined herein) “Stonepeak”), SP Common Equity Subsidiary LLC, a Delaware limited liability company, SP Preferred Equity Subsidiary LLC, a Delaware limited liability company, Stonepeak Texas Midstream Holdco LLC, a Delaware limited liability company, Stonepeak Catarina Upper Holdings, LLC, a Delaware limited liability company, Stonepeak Infrastructure Fund (Orion AIV) LP, a Delaware limited partnership, Stonepeak Associates LLC, a Delaware limited liability company, Stonepeak GP Holdings LP, a Delaware limited partnership, Stonepeak GP Investors LLC, a Delaware limited liability company, Stonepeak GP Investors Holdings LP, a Delaware limited partnership, Stonepeak GP Investors Upper Holdings LP, a Delaware limited partnership, Stonepeak GP Investors Holdings Manager LLC, a Delaware limited liability company, and Michael Dorrell, a citizen of the United States of America, (ii) Evolve Transition Infrastructure GP LLC (f/k/a Sanchez Midstream Partners GP LLC), a Delaware limited liability company and the general partner of Evolve (the “General Partner”), and (iii) Evolve Transition Infrastructure LP (f/k/a Sanchez Midstream Partners LP), a Delaware limited partnership (“Evolve”).
This Transaction Statement relates to the execution of a letter agreement, dated November 16, 2020 (the “Common Unit PIK Distribution Agreement”), pursuant to which Stonepeak Catarina, Evolve and the General Partner agreed that future quarterly distributions on the Class C Preferred Units representing limited partner interests in Evolve (“Class C Preferred Units”) are payable, at Stonepeak Catarina’s election, in common units representing limited partner interests in Evolve (“Common Units”) (any such quarterly distribution that is paid in Common Units, a “Common Unit PIK Distribution”) in lieu of a quarterly distribution paid in kind with additional Class C Preferred Units (such additional units, “Class C Preferred PIK Units”) and the exercise of the limited call right (as defined below).
As of the date of this Disclosure Statement, Stonepeak has completed the Stonepeak LCR Transfer (as defined herein) and the General Partner and its controlled affiliates own (i) 6,824,812 Common Units, representing approximately 81.6% of the outstanding Common Units, (ii) the non-economic general partner interest in Evolve and (iii) all of Evolve’s incentive distribution rights. Stonepeak owns (ii) all of the issued and outstanding Class C Preferred Units and (ii) a warrant, as amended from time to time, (the “Warrant”) that entitles Stonepeak Catarina to receive junior securities of Evolve (including Common Units) representing 10% of all junior securities deemed outstanding when exercised.
Pursuant to Section 15.1 of the Third Amended and Restated Agreement of Limited Partnership of Evolve (the “Partnership Agreement”), at any time the General Partner or its controlled affiliates hold more than 80% of the outstanding Common Units, the General Partner or a controlled affiliate of the General Partner is entitled to exercise the limited call right (the “limited call right”) to purchase all outstanding Common Units (other than Common Units held by the General Partner or its controlled affiliates). On January 8, 2024, the General Partner exercised the limited call right to purchase all outstanding Common Units (other than Common Units owned by the General Partner or its controlled affiliates) at a price per Common Unit of $1.389285. The purchase price was calculated pursuant to the formula set forth in Section 15.1(b) of the Limited Partnership Agreement based on the average of the daily closing prices per Common Unit on the NYSE American LLC for the 20 consecutive trading days ending on January 4, 2024, the trading day immediately prior to the third day prior to January 8, 2024, the date the notice of election was mailed.
The Common Unit PIK Distributions, the potential exercise of the Warrant and, if exercised, the exercise of the limited call right are referred to in this Transaction Statement as the “Transactions.”
AS OF THE DATE OF THIS TRANSACTION STATEMENT, STONEPEAK HAS CAUSED THE EXERCISE OF THE LIMITED CALL RIGHT.
However, the execution of the Common Unit PIK Distribution Agreement may be deemed to constitute a step towards one or more transactions that may constitute a “Rule 13e-3 transaction” under the rules and