Item 1.01Entry into a Material Definitive Agreement.
As previously disclosed, on August 2, 2019, Sanchez Midstream Partners LP (the “Partnership”) issued that certain Warrant Exercisable for Junior Securities (the “Warrant”) to Stonepeak Catarina Holdings LLC (“Stonepeak”). The Warrant may be exercised at any time and from time to time until the later of August 2, 2026 and the date 30 days after the date on which all of the Class C Preferred Units representing limited partner interests in the Partnership (“Class C Preferred Units”) have been redeemed for a number of Junior Securities (as such term is defined in the Warrant) equal to 10% of each applicable class of Junior Securities then outstanding as of the exercise date.
As previously disclosed, on November 16, 2020, the Partnership and Stonepeak entered into a letter agreement (the “Stonepeak Letter Agreement”), and in accordance with the Stonepeak Letter Agreement, on January 28, 2021, the Partnership received written notice of Stonepeak’s election to receive distributions on the Class C Preferred Units for the quarter ended December 31, 2020 in common units representing limited partner interests in the Partnership (“Common Units”). In accordance with the Stonepeak Letter Agreement, the Partnership has issued 12,445,491 Common Units (the “Q420 Stonepeak Units”) to Stonepeak.
As previously disclosed, the Partnership’s Long-Term Incentive Plan, effective March 6, 2015 (the “LTIP”), provides that upon the issuance of additional Common Units from time to time, the maximum number of Common Units that may be delivered or reserved for delivery with respect to the LTIP shall be automatically increased (such increase, the “LTIP Increase”) by a number of Common Units equal to the lesser of (i) fifteen percent (15%) of such additional Common Units, or (ii) such lesser number of Common Units as determined by the board of directors of Sanchez Midstream Partners GP LLC, the Partnership’s general partner (the “General Partner”).
On February 24, 2021, the Partnership and Stonepeak entered into Amendment No. 1 to Warrant Exercisable for Junior Securities to exclude from the Warrant the 1,866,823 Common Units included in the LTIP Increase resulting from the issuance of the Q420 Stonepeak Units. No LTIP Increase was made with respect to the prior issuance of Common Units pursuant to the Stonepeak Letter Agreement with respect to the quarter ended September 3, 2020.
Item 3.02Unregistered Sales of Equity Securities.
As previously disclosed, on November 16, 2020, the Partnership and Stonepeak entered into the Stonepeak Letter Agreement, and in accordance with the Stonepeak Letter Agreement, on January 28, 2021, the Partnership received written notice of Stonepeak’s election to receive distributions on the Class C Preferred Units for the quarter ended December 31, 2020 in Common Units.
Following satisfaction of each of the issuance conditions required in the Stonepeak Letter Agreement, on February 25, 2021, the Partnership issued the Q420 Stonepeak Units to Stonepeak. The issuance of the Q420 Stonepeak Units was a private placement of equity securities made in reliance on an exemption from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof as a transaction by an issuer not involving a public offering.
