February 3, 2020
Christopher R. Jones
Tallgrass Energy, LP
4200 W. 115th Street
Suite 350
Leawood, KS 66211
Re: Tallgrass Energy LP
PREM14A filed January 21, 2020
File No. 1-37365
Schedule 13E-3 filed January 21, 2020
Filed by Tallgrass Energy GP, LLC, et al.
File No. 5-88849
Dear Mr. Jones:
The staff in the Office of Mergers and Acquisitions has conducted a
limited review of the
filings listed above. We have limited our review of your proxy statement and
Schedule 13E-3 to
those issues we have addressed in the comments below. In some of our comments,
we may ask
you to provide us with information so we may better understand your disclosure.
Please respond to this letter within ten business days by amending your
filings, by
providing the requested information, or by advising us when you will provide
the requested
response. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your response.
After reviewing any amendment to your filings and the information you
provide in
response to these comments, we may have additional comments. Defined terms used
here have
the same meaning as in your proxy statement.
Schedule 13E-3 - General
1. Affiliates of TGE are parties to the Purchase Agreement signed January
30, 2019, as well
as the March 2019 Lock-Up and Non-Compete Agreements, pursuant to which
those
affiliates are entitled to convert or exchange their Retained Interests
into equity in TE,
TGE or their successor entities after the Merger. They have also agreed
to vote their
shares in the Merger in accordance with the recommendation of the TGE GP
Board. In
addition, we note the disclosure on page 22 of the proxy statement that
Blackstone
Christopher R. Jones
Tallgrass Energy LP
February 3, 2020
Page 2
wanted to ensure key members of management were incentivized to remain
and grow the
business of TGE after the acquisition. In light of their interest in the
transaction not
shared by other shareholders, tell us why the Lock-Up Parties are not
included as filers on
the Schedule 13E-3 or revise to include them, along with all of the
disclosure required by
the Schedule.
2. See our last comment above. We note that Jasmine Ventures Pte. Ltd. and
Enagas have
voting or dispositive authority over 44.36% of the Class A and Class B
shares pursuant to
their Equityholders Agreement with certain Blackstone affiliates.
Supplementally
provide your analysis, with a view to further disclosure, as to whether
these entities are
also engaged in this going private transaction by providing further
details about their
involvement with TGE before and after the Merger.
Schedule 14A filed January 21, 2020
General
3. Please revise to provide a Special Factors section at the forepart of the
proxy statement
that includes the disclosure required by Items 7, 8 and 9 of Schedule
13E-3 for each filer
on the Schedule. See Rule 13e-3(e)(1)(ii).
4. As a filing person on the Schedule 13E-3 and the issuer whose
unaffiliated shareholders
are being cashed out in the Merger, Tallgrass Energy LP has an obligation
to satisfy the
disclosure requirements of the Schedule, including with respect to the
fairness
determination. Revise generally to be clear (if accurate) that the
Conflicts Committee
recommendation and other disclosures are provided on behalf of the
issuer, instead of just
on behalf of TGE GP. (We note the statement in the second paragraph on
page 37, but
this should be clearly stated at the forepart of the disclosure document,
where the role of
the Conflicts Committee and its opinions are expressed).
The Merger Background of the Merger, page 21
5. We note the disclosure on page 24 of the proxy statement that during the
summer of
2019, Blackstone consulted with financial advisors regarding a possible
going private
transaction. As part of that analysis, it engaged in discussions with GIC
SI, Enagas and
several additional parties including USS and NPS. Please summarize any
oral or written
reports prepared by Citi or any other advisor in connection with
evaluating a transaction
which are not already summarized in the proxy statement.
Reasons for the Conflict Committee's Recommendation, page 32
6. See our comment above. Item 1014 of Regulation M-A requires TGE to
express and
support its view as to the fairness of the Merger to unaffiliated
shareholders. In this
section, the Conflicts Committee recommends the Merger, but does not
appear to express
Christopher R. Jones
Tallgrass Energy LP
February 3, 2020
Page 3
(on behalf of TGE see our comment above), a view as to the substantive
and procedural
fairness of the Merger, as required by Item 1014. Please revise.
7. Refer to Instruction 2 to Item 1014 of Regulation M-A. Revise to describe
how TGE (or
the party expressing a fairness determination on its behalf) considered
each of the factors
listed. If it did not consider some of the factors listed, explain why.
For example, it does
not appear that your discussion includes an analysis of the net book
value, liquidation
value, price paid in prior purchases by affiliates or going concern value
of the shares.
(Please also address this comment on behalf of all other filing persons
on the Schedule
13E-3).
8. Discuss how TGE or its designated representative acting on its behalf,
considered and
reached a conclusion about the procedural fairness of the Merger,
including how it
considered the procedural safeguards set forth in Item 1014(c), (d) and
(e). (Please also
address this comment on behalf of all other filing persons on the
Schedule 13E-3).
9. Refer to the disclosure on page 35 of the proxy statement. Provide
further details about
the "negative sentiment expressed by certain holders of Class A shares
concerning the
Lock-Up and Non-Compete Agreements." Describe when and by whom these
sentiments
were expressed and in what manner, and provide context as appropriate.
10. See our last comment above. Your expanded disclosure should explain the
conflicts
created by the Non-Compete and Lock-Up Agreements, rather than simply
describing the
terms of those Agreements.
Certain Financial Projections, page 37
11. For all projections disclosed, expand the discussion of the underlying
assumptions and
limitations on the figures presented. For example, at the bottom of page
38, you
reference "numerous material assumptions," but the bullet points there
are very generic
and don't detail the specific assumptions made.
Opinion of Evercore Financial Advisor to the Conflicts Committee, page 41
12. We note the disclosure in the second paragraph on page 41 that
"Evercore's opinion
should not be construed as creating any fiduciary duty on Evercore's
part to any party..."
(Similar language appears in the Summary section at the beginning of the
proxy
statement). We further note the following language on page 4 of
Evercore's opinion
included as Annex C: "The letter, and the opinion expressed herein, is
provided for the
information and benefit of the Conflicts Committee (in its capacity as
such) in connection
with the evaluation of the proposed Merger, and is not rendered to or
for the benefit of,
and shall not confer rights or remedies upon, any other person." Please
delete this
language in the proxy statement and the attachment. Alternatively,
revise to disclose the
legal basis for Evercore's and TGE's belief that security holders cannot
rely on the
opinion to bring state law actions, including a description of any state
law authority on
such a defense. If no such authority exists, disclose that this issue
will be resolved by a
Christopher R. Jones
Tallgrass Energy LP
February 3, 2020
Page 4
court, resolution of this issue will have no effect on rights and
responsibilities of TGE
under state law, and the availability of the defense will have no effect
on the rights and
responsibilities of either Evercore or TGE under the federal securities
laws.
13. We note the following disclosure in the Evercore opinion: "This opinion
may not be
disclosed, quoted, referred to or communicated (in whole or in part) to
any third party for
any purpose whatsoever except as set forth in our engagement letter with
the Partnership
and the Conflicts Committee, dated September 5, 2019, or as set forth in
Section 4.6 of
the Merger Agreement or otherwise with our prior written consent."
Please disclose that
Evercore consents to the use of the opinion and the references to it in
the proxy statement
and Schedule 13E-3.
14. While a summary is necessarily a selective presentation of information,
Item 1015
requires your description of the reports received by Evercore and Citi
and summarized in
the proxy statement to be complete. Please revise the language to the
contrary
throughout the proxy statement where you describe those summaries. See
for example,
the disclaimer in the second paragraph on page 43 and the language in
the last paragraph
on page 58.
Corporate Level Peer Group Trading Analysis, page 44
15. You state that Evercore chose the peer group because it deemed the
selected peers to
have "certain characteristics that are similar to TGE, including size
and asset base."
Expand the discussion of how this peer group was selected to describe
all of the material
factors that resulted in Evercore choosing these peers. Provide similar
expanded
disclosure throughout the proxy statement, where Evercore or Citi
compared this
transaction or TGE to other companies or other transactions. As examples
only, we direct
your attention to the disclosure under "REX and Non-REX Natural Gas
Transportation"
on page 48 and the disclosure under "Crude Oil Transportation and
Stanchion" on page
49.
General, page 58
16. The disclosure in the last paragraph, second to last sentence on page 58
states that
Evercore "may have given various analyses and factors more or less
weight than other
analyses and factors, and may have deemed various assumptions more or
less probable
than other assumptions." Which factors and analyses Evercore weighted
more heavily,
versus those it did not consider or granted little weight, is an
important part of its analysis
that should be described for shareholders. Please revise to address.
17. Refer to the disclosure concerning Evercore's compensation on page 59.
Clarify whether
the $500,000 Evercore received upon execution of the engagement letter
is in addition to
the $1,250,000 paid when its opinion was rendered and the $500,000
Evercore will
receive upon consummation of the Merger.
Christopher R. Jones
Tallgrass Energy LP
February 3, 2020
Page 5
Citigroup Global Markets, Inc. Financial Advisor..., page 60
18. It appears from the description of the Citi Discussion Materials on page
60 that Citi
received and used in its analyses financial forecasts relating to TGE.
Please disclose these
financial forecasts or refer to where they are already disclosed (to the
extent applicable).
19. Expand the disclosure in this section to describe each analysis
performed by Citi and the
results yielded. See Item 1015 of Regulation M-A. We note that the
disclosure in the
proxy statement should summarize in reasonable detail the materials
included as Exhibits
99(C)(8), (9) and (10) of the Schedule 13e-3 and provided by Citi, as
well as any other
written or oral reports it prepared in connection with this going
private transaction.
20. Refer to the last sentence, second paragraph in this section on page 60.
There you state:
"[t]he Discussion Materials were not based on certain procedures
typically applicable to
Citi's materials or presentations in connection with delivering an
opinion." Expand to
describe what typically-applicable procedures were omitted or modified
here, and to
explain more specifically why and how Citi's procedures differed (other
than the generic
explanation that it was not being asked to provide an opinion).
Miscellaneous, page 62
21. We note the disclosure in the first section of this section that "BIA
has agreed to pay Citi
for its services in connection with the Transaction an aggregate fee of
up to $4 million
contingent upon consummation of the Merger." Revise to be more specific
about the
circumstances under which Citi will receive the full $4 million
compensation, and what
other amounts it could earn in connection with its work here. See Item
1009 of
Regulation M-A and Item 14 of Schedule 13E-3.
Position of the Blackstone Parties as to the Fairness of the Merger, page 61
22. We note the following statement in paragraph two of this section on page
63: "The
Blackstone Parties did not undertake an independent evaluation of the
fairness of the
Merger to the TGE Unaffiliated Shareholders or engage a financial
adviser for such
purpose." Each filing person must independently analyze fairness to
unaffiliated
shareholders, or adopt the analysis of another filing person. Please
revise this section
accordingly.
The Blackstone Parties' Purpose and Reasons for the Merger, page 63
23. Your disclosure of the reasons for the timing of the Merger is not
clear, since the reasons
cited do not relate specifically to timing. Please revise to clarify.
Christopher R. Jones
Tallgrass Energy LP
February 3, 2020
Page 6
We remind you that TGE and other filing persons on the Schedule 13E-3
are responsible
for the accuracy and adequacy of their disclosures in both filings,
notwithstanding any review,
comments, action or absence of action by the staff.
Please contact me at 202-551-3263 with any questions.
Sincerely,
/s/ Christina Chalk
Christina Chalk
Senior Special
Counsel
Office of Mergers &
Acquisitions
cc: Mollie Duckworth, Esq.
Baker Botts L.L.P.
(via email)
Keith Fullenweider, Esq.
Vinson & Elkins L.L.P.
(via email)