PLAINS GP HOLDINGS LP
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) — July 12, 2021
Plains GP Holdings, L.P.
(Exact name of registrant as specified in its charter)
|(State or other jurisdiction of|
|(Commission File Number)||(IRS Employer|
333 Clay Street, Suite 1600, Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
|¨||Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)|
|¨||Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)|
|¨||Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))|
|¨||Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))|
Securities registered pursuant to Section 12(b) of the Act:
|Title of each class||Trading Symbol(s)||Name of each exchange on which registered|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
|Item 1.01||Entry Into a Material Definitive Agreement.|
On July 12, 2021, subsidiaries of Plains All American Pipeline, L.P. (“PAA”), a wholly-owned subsidiary of Plains GP Holdings, L.P. (“PAGP” or the “Registrant”), and Oryx Midstream Holdings LLC ( together with certain affiliates, “Oryx”), a portfolio company of Stonepeak Infrastructure Partners (“Stonepeak”)1, executed a definitive merger agreement (the “Merger Agreement”) pursuant to which they intend to merge, in a cashless transaction, their respective Permian Basin assets, operations and commercial activities into a newly formed strategic joint venture, Plains Oryx Permian Basin LLC (the “Joint Venture”). The Joint Venture will have no debt and will be owned 65% by PAA and 35% by Oryx. PAA will serve as operator of the Joint Venture.
Key terms and conditions of the Merger Agreement include the following:
|·||Pursuant to the Merger Agreement and subject to satisfaction of the closing conditions described below, PAA and Oryx intend to combine their respective Permian Basin gathering businesses and form the Joint Venture through a series of merger and contribution transactions.|
|·||The Merger Agreement includes customary and reciprocal representations and warranties by each party.|
|·||Closing is subject to various conditions, including the following:|
|○||Completion by Oryx of a proposed refinancing of debt at its equity owner level.|
|○||Receipt of regulatory approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR”).|
|○||Satisfaction of other customary closing conditions.|
|·||At closing, the parties will execute an LLC agreement forming the Joint Venture, the key terms of which are as follows:|
|○||Ownership and Governance. Subject to the tiered modified sharing arrangement described below, the Joint Venture will be owned 65% by PAA and 35% by Oryx. The Joint Venture will be managed by a five-member Board including three PAA representatives and two Oryx representatives. PAA will serve as operator of the Joint Venture, and a joint operating committee that includes representatives from PAA and Oryx will provide oversight on material Joint Venture operational and commercial decisions. The Joint Venture will be consolidated into PAA's financial statements.|
|○||Distributions. Quarterly distributions of available cash (cash on hand at end of quarter less reserves) from the Joint Venture to PAA and Oryx will be subject to a tiered modified sharing arrangement (“MSA”) for up to 10 years. Under the MSA, distributions will be allocated as follows:|
|Available Cash||Distribution Percentages|
|1||Up to $300mm||50||%||50||%|
|2||$300mm - $428mm||100||%||0||%|
|3||$428mm - $815mm||65||%||35||%|
|4||$815mm and above||70||%||30||%|
Upon termination of the MSA, quarterly distributions of available cash will be paid 65% to PAA and 35% to Oryx.
|○||Area of Mutual Interest. Joint Venture members and their affiliates (other than Stonepeak and its non-Oryx portfolio companies) will be restricted from developing, acquiring or owning any assets related to gathering and marketing crude oil and condensate in the Permian Basin, subject to certain exceptions.|
|○||Future Downstream Projects. For a period of seven years after closing, the Joint Venture will have certain limited investment rights with respect to material downstream projects pursued by either member.|
|○||Transfer of Interests and Related Provisions. In general, each Joint Venture member will be free to transfer all, but not less than all, of its respective interest in the Joint Venture; however, under certain circumstances and subject to certain limitations, (1) if Oryx desires to transfer its interest, is subject to a permitted foreclosure by certain lenders or is anticipated to be the subject of a change of control, PAA will have the right to make an offer and negotiate to acquire Oryx’s interest, and (2) if PAA desires to transfer its interest or undergoes a change of control, Oryx will have certain tag-along rights.|
Subject to satisfaction of closing conditions, including receipt of regulatory approvals, the transactions contemplated by the Merger Agreement are expected to close in the fourth quarter of 2021.
The foregoing description of the Merger Agreement is qualified in its entirety by reference to such Merger Agreement, a copy of which is filed herewith as Exhibit 2.1 and is incorporated herein by reference.
1 Affiliates of Stonepeak own approximately 8.9% of PAA’s outstanding Series A Preferred Units, which equates to less than 1% of PAA’s outstanding common units and common unit equivalents combined.
|Item 7.01||Regulation FD Disclosure.|
In accordance with General Instruction B.2 of Form 8-K, the information presented herein under Item 7.01 shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, each as amended.
On July 13, 2021, PAA and PAGP issued a press release announcing the execution of the Merger Agreement. A copy of the press release is furnished as Exhibit 99.1 hereto.
|Item 9.01||Financial Statements and Exhibits.|
|2.1*||Agreement and Plan of Merger dated as of July 12, 2021 by and among Plains Pipeline, L.P., Plains Marketing, L.P., Oryx Midstream Holdings LLC, Middle Cadence Holdings LLC, POP HoldCo LLC, Oryx Wink Oil Marketing LLC, Oryx Permian Oil Marketing LLC, Plains ryx Permian Basin LLC, Plains Oryx Permian Basin Marketing LLC and Plains Oryx Permian Basin Pipeline LLC.|
|99.1||Press Release Dated July 13, 2021.|
|104||Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)|
* Certain schedules and similar attachments have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant agrees to furnish a supplemental copy of any omitted schedule or attachment to the SEC upon request.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|Date: July 13, 2021||PLAINS GP HOLDINGS, L.P.|
|By:||PAA GP Holdings LLC, its general partner|
|By:||/s/ Richard McGee|
|Title:||Executive Vice President, General Counsel & Secretary|