UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE TO
Tender Offer Statement under Section 14(d)(1) or 13(e)(1)
of the Securities Exchange Act of 1934
Summit Midstream Partners, LP
(Name of Subject Company and Filing Person (Issuer))
9.50% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units
(Title of Class of Securities)
866142AA0
(CUSIP Number of Class of Securities)
James D. Johnston
910 Louisiana Street, Suite 4200
Houston, Texas 77002
(832) 413-4770
(Name, address and telephone number of person authorized to receive notices and communications on behalf of filing person)
Copies to:
Joshua Davidson
Clinton W. Rancher
Baker Botts L.L.P.
910 Louisiana Street
Houston, Texas 77002
(713) 229-1234
CALCULATION OF FILING FEE
Transaction Valuation* | Amount of Filing Fee | |
$35,616,800.00 | $3,885.79 | |
|
* | Estimated solely for the purpose of calculating the registration fee. The transaction valuation upon which the filing fee was based was calculated as follows: the product of $445.21, average of the bid and asked price of the Partnership’s 9.50% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units, (the “Series A Preferred Units”) as of March 4, 2021, and 80,000, the maximum amount of issued and outstanding Series A Preferred Units offered to be exchanged. The amount of the filing fee assumes that 80,000 of the outstanding Series A Preferred Units will be exchanged and is calculated pursuant to Rule 0-11(b) of the Securities Exchange Act of 1934, as amended. |
☐ | Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
Amount Previously Paid: N/A | Filing Party: N/A | |
Form or Registration No.: N/A | Date Filed: N/A |
☐ | Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. |
Check the appropriate boxes below to designate any transactions to which the statement relates:
☐ | third-party tender offer subject to Rule 14d-1. |
☒ | issuer tender offer subject to Rule 13e-4. |
☐ | going-private transaction subject to Rule 13e-3. |
☐ | amendment to Schedule 13D under Rule 13d-2. |
Check the following box if the filing is a final amendment reporting the results of the tender offer: ☐
If applicable, check the appropriate box(es) below to designate the appropriate rule provision(s) relied upon:
☐ | Rule 13e-4(i) (Cross-Border Issuer Tender Offer) |
☐ | Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) |
SCHEDULE TO
This Tender Offer Statement on Schedule TO (this “Schedule TO”) relates to the offer (the “Exchange Offer”) by Summit Midstream Partners, LP (the “Partnership”) to exchange the Partnership’s 9.50% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (Liquidation Preference $1,000) (the “Series A Preferred Units”) tendered in the Exchange Offer for up to 2,160,000 newly issued common units (the “Maximum Exchange Amount”) representing limited partner interests in the Partnership (the “Common Units”).
In exchange for each Series A Preferred Unit properly tendered (and not validly withdrawn) prior to 11:59 p.m., New York City time, on April 6, 2021 (such time and date, as the same may be extended, the “Expiration Date”) and accepted by the Partnership, participating holders of Series A Preferred Units will receive 27 Common Units (the “Exchange Consideration”). If the aggregate number of Common Units issuable in exchange for Series A Preferred Units that are properly tendered (and not validly withdrawn) as of the Expiration Date exceeds the Maximum Exchange Amount, we will accept for exchange that number of Series A Preferred Units that does not result in the number of Common Units being issued in the Exchange Offer exceeding the Maximum Exchange Amount. In that event, the Series A Preferred Units that will be accepted for exchange will be subject to proration, as described in this Offer to Exchange. The maximum number of Series A Preferred Units that will be exchanged for the Exchange Consideration under the Exchange Offer is 80,000.
The Exchange Offer shall commence on the filing date hereof and shall expire on the Expiration Date. The Exchange Offer will be made upon the terms and subject to the conditions set forth in the offer to exchange (as it may be supplemented and amended from time to time, the “Offer to Exchange”) and in the related letter of transmittal (as it may be supplemented and amended from time to time, the “Letter of Transmittal” and, together with the Offer to Exchange, the “Offering Documents”), which are filed as exhibits (a)(1)(i) and (a)(1)(ii) hereto.
The Exchange Offer is conditioned on, among other things, that (i) holders of at least 15,000 Series A Preferred Units properly tender (and do not validly withdraw) their Series A Preferred Units prior to the Expiration Date (the “Minimum Tender Condition”), (ii) there shall have not been instituted, threatened in writing or be pending any action or proceeding before or by any court, governmental, regulatory or administrative agency or instrumentality, or by any other person, in connection with the Exchange Offer, that is, or is reasonably likely to be, in our reasonable judgment, materially adverse to our business, operations, properties, condition, assets, liabilities or prospects, or which would or might, in our reasonable judgment, prohibit, prevent, restrict or delay consummation of the Exchange Offer or materially impair the contemplated benefits to us (as set forth under the section of the Offer to Exchange titled “The Exchange Offer — Purpose of the Exchange Offer”) of the Exchange Offer, (iii) no order, statute, rule, regulation, executive order, stay, decree, judgment or injunction shall have been proposed, enacted, entered, issued, promulgated, enforced or deemed applicable by any court or governmental, regulatory or administrative agency or instrumentality that, in our reasonable judgment, would or would be reasonably likely to prohibit, prevent, restrict or delay consummation of the Exchange Offer or materially impair the contemplated benefits to us of the Exchange Offer, or that is, or is reasonably likely to be, materially adverse to our business, operations, properties, condition, assets, liabilities or prospects, (iv) there shall have not occurred or be reasonably likely to occur any material adverse change to our business, operations, properties, condition, assets, liabilities, prospects or financial affairs and (v) there shall have not occurred (a) any general suspension of, or limitation on prices for, trading in securities in U.S. securities or financial markets, (b) a declaration of a banking moratorium or any suspension of payments in respect to banks in the United States, (c) any limitation (whether or not mandatory) by any government or governmental, regulatory or administrative authority, agency or instrumentality, domestic or foreign, or other event that, in our reasonable judgment, would or would be reasonably likely to affect the extension of credit by banks or other lending institutions or (d) a natural disaster or the commencement or material worsening of a war, armed hostilities, act of terrorism or other international or national calamity directly or indirectly involving the United States which, in our reasonable judgment, diminishes general economic activity to a degree sufficient to materially reduce demand for natural gas and oil consumption. See the section of the Offer to Exchange titled “The Exchange Offer — Conditions to the Exchange Offer” for a complete description of the conditions of the Exchange Offer. We reserve the right to extend or terminate the Exchange Offer if any condition of the Exchange Offer is not satisfied and otherwise to amend the Exchange Offer in any respect.
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This Schedule TO is being filed in satisfaction of the reporting requirements of Rules 13e-4 promulgated under the Securities Exchange Act of 1934, as amended. Information set forth in the Offering Documents is incorporated herein by reference in response to Items 1 through 13 of this Schedule TO, except those items as to which information is specifically provided herein.
Item 1. | Summary Term Sheet. |
The information set forth in the Offer to Exchange in the sections titled “Questions and Answers About the Exchange Offer” and “Summary” is incorporated herein by reference.
Item 2. | Subject Company Information. |
(a) Name and Address.
The name of the subject company and the filing person is Summit Midstream Partners, LP. The address of the Partnership’s principal executive offices is 910 Louisiana Street, Suite 4200, Houston, Texas 77002. The Partnership’s telephone number is (832) 413-4770.
(b) Securities.
The subject class of securities is the Partnership’s 9.50% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units. There are 162,109 Series A Preferred Units issued and outstanding as of the date hereof, with a liquidation preference in the amount of $1,000 per unit, plus accumulated and unpaid distributions, upon any voluntary or involuntary liquidation, winding-up or dissolution of the Partnership.
(c) Trading Market and Price.
The information set forth in the Offer to Exchange in the section titled “Price Ranges of Series A Preferred Units and Distributions” is incorporated herein by reference.
Item 3. | Identity and Background of Filing Person. |
(a) Name and Address.
Summit Midstream Partners, LP is the filing person and subject company. The business address and telephone number of the Partnership are set forth under Item 2(a) of this Schedule TO and are incorporated herein by reference.
Pursuant to Instruction C to Schedule TO, the following persons are the directors and executive officers of Summit Midstream GP, LLC, the general partner of the Partnership (the “General Partner”). The Partnership owns the equity interest in its General Partner.
Name | Position with Summit Midstream GP, LLC | |
J. Heath Deneke | President and Chief Executive Officer, Chairman of the Board | |
Marc D. Stratton | Executive Vice President and Chief Financial Officer | |
James D. Johnston | Executive Vice President, General Counsel and Chief Compliance Officer | |
Robert M. Wohleber | Lead Independent Director | |
Lee Jacobe | Director | |
Robert McNally | Director | |
Jerry Peters | Director | |
James Cleary | Director | |
Marguerite Woung-Chapman | Director |
The address and telephone number of each director and executive officer is: 910 Louisiana Street, Suite 4200, Houston, Texas 77002, and each person’s telephone number is (832) 413-4770.
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Item 4. | Terms of the Transaction. |
(a) Material Terms.
The information set forth in the Offer to Exchange in the sections titled “Questions and Answers About the Exchange Offer,” “Summary,” “The Exchange Offer,” “Comparison of Rights Between Series A Preferred Units and Our Common Units,” “Material U.S. Federal Income Tax Consequences of the Exchange Offer” and “Material U.S. Federal Income Tax Consequences of Common Unit Ownership,” as well as the information set forth in the Letter of Transmittal, is incorporated herein by reference.
(b) Purchases.
To our knowledge, none of the directors or executive officers of our General Partner beneficially own any Series A Preferred Units, and therefore no such persons will participate in the Exchange Offer.
Item 5. | Past Contacts, Transactions, Negotiations and Agreements. |
(a) Agreements Involving the Subject Company’s Securities.
The terms of the Common Units and the Series A Preferred Units are governed by the Fourth Amended and Restated Agreement of Limited Partnership of the Partnership, dated May 28, 2020 and filed as exhibit (d)(1) hereto.
The information set forth in the Offer to Exchange in the section titled “Comparison of Rights between Series A Preferred Units and Our Common Units” is incorporated herein by reference.
Warrants
On May 28, 2020, we issued warrants (the “Warrants”) to SMP TopCo, LLC and SMLP Holdings, LLC, affiliates of Energy Capital Partners II, LLC (the “ECP Entities”), to purchase up to an aggregate of 666,667 Common Units. The exercise price under the Warrants is $15.345 per Common Unit.
The Warrants also provide that the Partnership file a registration statement to register the Common Units issuable upon exercise of the Warrants. Such registration statement became effective on August 27, 2020. The Warrants have not been registered under the Securities Act of 1933, as amended (the “1933 Act”), and were issued, and warrants issued in the future will be issued, in reliance upon the exemption provided in Section 4(a)(2) of the 1933 Act.
Upon exercise of the Warrants, each of the ECP Entities may receive, at its election, (i) a number of Common Units equal to the number of Common Units for which the Warrants are being exercised, if exercising the warrant by cash payment of the exercise price; (ii) a number of Common Units equal to the product of the number of Common Units being exercised multiplied by (a) the difference between the average of the daily volume-weighted average price (“VWAP”) of the Common Units on the New York Stock Exchange (the “NYSE”) on each of the three trading days prior to the delivery of the notice of exercise (the “VWAP Average”) and the exercise price (the “VWAP Difference”), divided by (b) the VWAP Average; and/or (iii) an amount in cash, to the extent that the Partnership’s leverage ratio would be at least 0.5x less than the maximum applicable ratio set forth in the Partnership’s existing revolving credit facility, equal to the product of (a) the number of Common Units exercised and (b) the VWAP Difference, subject to certain adjustments under the Warrants.
The Warrants are subject to standard anti-dilution adjustments for stock dividends, stock splits (including reverse stock splits) and recapitalizations and are exercisable at any time on or before May 28, 2023. Upon exercise of the Warrants, the proceeds to the holders of the Warrants, whether in the form of cash or Common Units, will be capped at $30.00 per Common Units above the exercise price.
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SMLP Long-Term Incentive Plan
The Partnership’s 2012 Long-Term Incentive Plan (“SMLP LTIP”) provides for equity awards to eligible officers, employees, consultants and directors of the Partnership, thereby linking the recipients’ compensation directly to the Partnership’s performance. The SMLP LTIP provides for the granting, from time to time, of unit-based awards, including common units, restricted units, phantom units, unit options, unit appreciation rights, distribution equivalent rights, profits interest units and other unit-based awards. Grants are made at the discretion of the board of directors of the General Partner (the “Board of Directors”) or Compensation Committee of the Board of Directors. As of December 31, 2020, approximately 0.4 million common units (of the 1.0 million common units originally reserved) remained available for future issuance.
Item 6. | Purposes of the Transaction and Plans or Proposals. |
(a) Purposes.
The information set forth in the Offer to Exchange in the section titled “The Exchange Offer — Purpose of the Exchange Offer” is incorporated herein by reference.
(b) Use of Securities Acquired.
Any of the Series A Preferred Units acquired pursuant to the Exchange Offer will be cancelled, together with the accrued and unpaid distributions associated with such Series A Preferred Unit.
(c) Plans.
(1) None.
(2) None.
(3) The information set forth in the Offer to Exchange in the section titled “Questions and Answers About the Exchange Offer” is incorporated herein by reference.
(4) None.
(5) None.
(6) None.
(7) None.
(8) None.
(9) None.
Item 7. | Source and Amount of Funds or Other Consideration. |
(a) Source of Funds.
The information set forth in the Offer to Exchange in the sections titled “The Exchange Offer — Terms of the Exchange Offer” and “Questions and Answers About the Exchange Offer” are incorporated herein by reference. Assuming full participation in the Exchange Offer, the Partnership will issue approximately 2,160,000 Common Units as consideration for the Exchange Offer.
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(b) Conditions.
The information set forth in the Offer to Exchange in the sections titled “The Exchange Offer — Terms of the Exchange Offer” and “Questions and Answers About the Exchange Offer” are incorporated herein by reference.
(c) Borrowed Funds.
Not applicable.
Item 8. | Interest in the Securities of the Subject Company. |
(a) Securities Ownership.
To our knowledge, none of our directors or executive officers beneficially own any Series A Preferred Units.
(b) Securities Transactions.
None.
Item 9. | Persons/Assets, Retained, Employed, Compensated or Used. |
(a) Solicitations or Recommendations.
The information set forth in the Offer to Exchange in the section titled “Information Agent and Depositary” is incorporated herein by reference. None of the Partnership, the General Partner, its Board of Directors, officers or employees, the information agent or the depositary is making any recommendation as to whether holders of Series A Preferred Units should tender their units for exchange in the Exchange Offer.
Item 10. | Financial Statements. |
(a) Financial Information.
The financial statements and other information set forth under Part II, Item 8 of the Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 are incorporated by reference herein and may be accessed electronically on the SEC’s website at http://www.sec.gov.
(b) Pro Forma Information.
Not applicable.
Item 11. | Additional Information. |
(a) Agreements, Regulatory Requirements and Legal Proceedings.
The information set forth in the Offer to Exchange in the section titled “The Exchange Offer — Conditions to the Exchange Offer” is incorporated herein by reference.
(b) Other Material Information.
The information set forth in the Offer to Exchange and the Letter of Transmittal is incorporated herein by reference.
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Item 12. | Exhibits. |
Item 13. | Information Required by Schedule 13E-3. |
Not applicable.
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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Date: March 10, 2021
Summit Midstream Partners, LP | ||
By: Summit Midstream GP, LLC (its general partner) | ||
/s/ Marc D. Stratton | ||
Marc D. Stratton, Executive Vice President and Chief Financial Officer |
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