Schedules July
18th Special Meeting for Unitholder Approval:
Recommends Common Unitholders Vote "FOR" C-Corporation
Conversion
Files Investor Presentation, Outlining
Benefits for Summit Unitholders
HOUSTON, June 17,
2024 /PRNewswire/ -- Summit Midstream Partners, LP
(NYSE: SMLP) ("Summit," "SMLP" or the "Partnership") announced
today that it filed a proxy statement/prospectus (the "Proxy
Statement/Prospectus") and investor presentation and scheduled a
Special Meeting of Common Unitholders (the "Special Meeting") to
vote on the reorganization from a master limited partnership
("MLP") to a C-corporation.
The Special Meeting will be held virtually on July 18, 2024 at 2:00 p.m.
Central Time. Summit common unitholders of record at the
close of business on June 7, 2024 are
entitled to vote at or in advance of the Special Meeting. The
Summit Board of Directors unanimously recommends that Summit common
unitholders vote "FOR" the reorganization to a C-corporation.
Common unitholders will be receiving proxy cards or other
instructions regarding how to vote on the transaction over the next
few days.
Heath Deneke, President, Chief
Executive Officer, and Chairman, commented, "After carefully
considering a wide range of opportunities, the Board is confident
that reorganizing to a C-corporation is in the best interests of
Summit and all unitholders. The transaction will reduce
unitholders' tax burden; simplify Summit's structure to make the
equity easier to own; enhance trading liquidity; greatly expand the
universe of potential investors; and reduce administrative burden,
providing greater transparency and easier decision-making for
investors. We urge all Summit common unitholders to vote 'FOR' the
reorganization to a C-corporation."
The Conversion Will Deliver Key Benefits to Unitholders,
including:
- Tax Benefits for Unitholders
- Reduces unitholder's tax burden going forward,
including by eliminating the recapture of previously
allocated MLP items
- Majority of current unitholders are projected to have positive
tax capital account balances at the conversion date, resulting in
no taxable gain from the proposed non-taxable exchange
- Recent effects of changes in tax laws have reduced the ability
of MLPs to utilize bonus depreciation and deduct
interest expense, crucial levers to defer cash tax obligations for
ownership of MLP units
- In the current MLP structure, a substantial portion of
existing Summit unitholders are expected to be allocated positive
taxable income over the next few years, resulting in an increase in
annual taxes owed by longer-tenured unitholders
- Upon becoming a C-corporation, Summit does not expect any
material corporate cash tax leakage for the foreseeable
future
- Maximizes Potential Index Inclusion and Trading Liquidity
- Potential for investment demand by mutual funds benchmarked to
Russell and S&P
indices1,2,3
- Greater potential trading liquidity as equity accessible by
deeper pool of domestic and international investors, including
tax-exempt and non-U.S. institutions
- Aligns Summit's Tax Structure with its Gathering and Processing
Peer Group
- Simplifies Summit's Structure and Reduces Administrative Burden
- Streamlines tax reporting (i.e., no K-1s for tax years
following the reorganization to a
C-corporation)
- Creates publicly traded entity with no change in relative
ownership
- Provides greater transparency to investors on tax implications
of buy/hold decisions
Following Summit unitholder approval, the transaction is
expected to close later in 2024.
Presentation
An investor presentation with additional information for
unitholders can also be found on the Investors section of Summit's
website at www.summitmidstream.com.
Summit common unitholders who need assistance in
completing the proxy card, need additional copies of the proxy
materials or have questions regarding the upcoming Special Meeting
should contact Summit's proxy solicitor:
Morrow Sodali, LLC
Phone: (800) 662-5200 or (203) 658-9400
Email: SMLP@info.morrowsodali.com
About Summit Midstream Partners, LP
SMLP is a value-driven limited partnership focused on
developing, owning and operating midstream energy infrastructure
assets that are strategically located in the core producing areas
of unconventional resource basins, primarily shale formations, in
the continental United States.
SMLP provides natural gas, crude oil and produced water gathering,
processing and transportation services pursuant to primarily
long-term, fee-based agreements with customers and counterparties
in four unconventional resource basins: (i) the Williston Basin, which includes the Bakken and
Three Forks shale formations in North
Dakota; (ii) the Denver-Julesburg Basin, which includes the
Niobrara and Codell shale
formations in Colorado and
Wyoming; (iii) the Fort Worth Basin, which includes the Barnett
Shale formation in Texas; and (iv)
the Piceance Basin, which includes the Mesaverde formation as well
as the Mancos and Niobrara shale formations in Colorado. SMLP has an equity method investment
in Double E Pipeline, LLC, which provides interstate natural gas
transportation service from multiple receipt points in the
Delaware Basin to various delivery
points in and around the Waha Hub in Texas. SMLP is headquartered in Houston, Texas.
Forward-Looking Statements
This communication contains forward-looking statements that are
subject to a number of risks and uncertainties, many of which are
beyond the control of the Partnership and Summit Midstream
Corporation (the "New Summit"), which may include statements
about:
- the occurrence of any event, change or other circumstances that
could give rise to the termination of the Agreement and Plan of
Merger (the "Merger Agreement");
- the risk that the failure to consummate the reorganization to a
C-Corporation ("Corporate Reorganization") will disrupt ongoing or
future strategic alternatives, including a Potential Transaction
(as defined in the Proxy Statement/Prospectus);
- the outcome of any legal proceedings that may be instituted
against the Partnership or New Summit and others relating to the
Merger Agreement;
- the effect of the announcement of the Corporate Reorganization
on the Partnership's customer relationships, operating results and
business generally;
- the risks that the proposed Corporate Reorganization disrupts
current plans and operations;
- the amount of the costs, fees, expenses and charges related to
the Corporate Reorganization;
- the failure to obtain the unitholder approval and to satisfy
the other conditions to the consummation of the Corporate
Reorganization;
- the failure to realize a lower long-term cost of capital and
other anticipated benefits of the proposed Corporate
Reorganization;
- the Partnership and New Summit's ability to access the debt and
equity markets, which will depend on general market conditions and
the credit ratings for debt obligations;
- fluctuations in natural gas, natural gas liquids ("NGLs") and
crude oil prices, including as a result of political or economic
measures taken by various countries or the Organization of the
Petroleum Exporting Countries;
- the extent and success of the Partnership's and New Summit's
customers' drilling and completion efforts, as well as the quantity
of natural gas, crude oil, freshwater deliveries, and produced
water volumes produced within proximity of the Partnership's and
New Summit's assets;
- failure or delays by the Partnership's and New Summit's
customers in achieving expected production in their natural gas,
crude oil and produced water projects;
- competitive conditions in the Partnership's and New Summit's
industry and their impact on the Partnership's and New Summit's
ability to connect hydrocarbon supplies to the Partnership's and
New Summit's gathering and processing assets or systems;
- actions or inactions taken or nonperformance by third parties,
including suppliers, contractors, operators, processors,
transporters and customers, including the inability or failure of
the Partnership's and New Summit's shipper customers to meet their
financial obligations under the Partnership's and New Summit's
gathering agreements and the Partnership's and New Summit's ability
to enforce the terms and conditions of certain of the Partnership's
and New Summit's gathering agreements in the event of a bankruptcy
of one or more of the Partnership's and New Summit's
customers;
- the Partnership's and New Summit's ability to divest of certain
of the Partnership's and New Summit's assets to third parties on
attractive terms, which is subject to a number of factors,
including prevailing conditions and outlook in the natural gas, NGL
and crude oil industries and markets;
- the ability to attract and retain key management
personnel;
- commercial bank and capital market conditions and the potential
impact of changes or disruptions in the credit and/or capital
markets;
- changes in the availability and cost of capital and the results
of the Partnership's and New Summit's financing efforts, including
availability of funds in the credit and/or capital markets;
- restrictions placed on the Partnership and New Summit by the
agreements governing the Partnership's and New Summit's debt and
preferred equity instruments;
- the availability, terms and cost of downstream transportation
and processing services;
- natural disasters, accidents, weather-related delays, casualty
losses and other matters beyond the Partnership's and New Summit's
control;
- the current and potential future impact of the COVID-19
pandemic or other pandemics on the Partnership's and New Summit's
business, results of operations, financial position or cash
flows;
- operational risks and hazards inherent in the gathering,
compression, treating and/or processing of natural gas, crude oil
and produced water;
- the Partnership's and New Summit's ability to comply with the
terms of the agreements comprising the Global Settlement (as
defined in the Proxy Statement/Prospectus);
- weather conditions and terrain in certain areas in which the
Partnership and New Summit operate;
- physical and financial risks associated with climate
change;
- any other issues that can result in deficiencies in the design,
installation or operation of the Partnership's and New Summit's
gathering, compression, treating, processing and freshwater
facilities;
- timely receipt of necessary government approvals and permits,
the Partnership's and New Summit's ability to control the costs of
construction, including costs of materials, labor and rights-of-way
and other factors that may impact the Partnership's and New
Summit's ability to complete projects within budget and on
schedule;
- the Partnership's and New Summit's ability to finance the
Partnership's and New Summit's obligations related to capital
expenditures, including through opportunistic asset divestitures or
joint ventures and the impact any such divestitures or joint
ventures could have on the Partnership's and New Summit's
results;
- the effects of existing and future laws and governmental
regulations, including environmental, safety and climate change
requirements and federal, state and local restrictions or
requirements applicable to oil and/or gas drilling, production or
transportation;
- the effects of litigation;
- interest rates;
- changes in general economic conditions; and
- other factors and uncertainties discussed in Proxy
Statement/Prospectus and the Partnership's filings with the U.S.
Securities and Exchange Commission (the "SEC"), including the
Partnership's Annual Report on Form 10-K for the year ended
December 31, 2023 (the "Annual
Report") and the Partnership's Quarterly Report on Form 10-Q for
the quarter ended March 31,
2024.
All of these types of statements, other than statements of
historical fact included in this communication, are forward-looking
statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "could," "should,"
"expect," "plan," "project," "intend," "anticipate," "believe,"
"estimate," "predict," "potential," "pursue," "target," "continue,"
the negative of such terms or other comparable terminology.
The forward-looking statements contained in the Proxy
Statement/Prospectus are largely based on the Partnership's
expectations, which reflect estimates and assumptions made by the
Partnership's management. These estimates and assumptions reflect
the Partnership's best judgment based on currently known market
conditions and other factors. Although the Partnership believes
such estimates and assumptions to be reasonable, they are
inherently uncertain and involve a number of risks and
uncertainties that are beyond the Partnership's control. In
addition, management's assumptions about future events may prove to
be inaccurate. All readers are cautioned that the forward-looking
statements contained in the Proxy Statement/Prospectus are not
guarantees of future performance, and the Partnership's
expectations may not be realized or the forward-looking events and
circumstances may not occur. Actual results may differ materially
from those anticipated or implied in the forward-looking statements
due to factors described in the section of the Proxy
Statement/Prospectus entitled "Risk Factors." The forward-looking
statements in the Proxy Statement/Prospectus speak only as of the
date of this document; we disclaim any obligation to update such
statements unless required by securities law, and we caution you
not to unduly rely on them.
Additional Information and Where to Find It
This communication relates to the proposed Corporate
Reorganization of the Partnership. This communication may be deemed
to be solicitation material in respect of the proposed Corporate
Reorganization. The proposed Corporate Reorganization has been
submitted to the Partnership's common unitholders for their
consideration. In connection with the proposed Corporate
Reorganization, New Summit has filed with the SEC a Form S-4
containing the Proxy Statement/Prospectus to be distributed to the
Partnership's common unitholders in connection with the
Partnership's solicitation of proxies for the vote of the
Partnership's common unitholders in connection with the proposed
Corporate Reorganization and other matters as described in such
Proxy Statement/Prospectus. The Proxy Statement/Prospectus also
serves as the prospectus relating to the offer of the securities to
be issued to the Partnership's common unitholders in connection
with the completion of the proposed Corporate Reorganization. The
Partnership and New Summit may file other relevant documents with
the SEC regarding the proposed Corporate Reorganization. The
definitive Proxy Statement/Prospectus has been mailed to the
Partnership's common unitholders. BEFORE MAKING ANY VOTING OR
INVESTMENT DECISION WITH RESPECT TO THE PROPOSED CORPORATE
REORGANIZATION, INVESTORS AND COMMON UNITHOLDERS AND OTHER
INTERESTED PERSONS ARE URGED TO READ THE DEFINITIVE PROXY
STATEMENT/PROSPECTUS REGARDING THE PROPOSED CORPORATE
REORGANIZATION (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO)
AND OTHER RELEVANT MATERIALS CAREFULLY AND IN THEIR ENTIRETY
BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
CORPORATE REORGANIZATION.
The Proxy Statement/Prospectus, any amendments or supplements
thereto and other relevant materials, and any other documents filed
by the Partnership or New Summit with the SEC, may be obtained as
such documents are filed with the SEC free of charge at the SEC's
website at www.sec.gov or by directing a written request to the
Partnership at 910 Louisiana Street, Suite 4200, Houston, Texas 77002.
No Offer or Solicitation
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities, or a solicitation
of any vote or approval, nor shall there be any sale of securities
in any jurisdiction in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended.
Participants in the Solicitation
The Partnership, Summit Midstream GP, LLC (the "General
Partner"), and certain of the General Partner's executive officers,
directors, other members of management and employees may, under the
rules of the SEC, be deemed to be "participants" in the
solicitation of proxies in connection with the proposed Corporate
Reorganization. Information regarding the General Partner's
directors and executive officers is available in the Annual Report.
To the extent that holdings of the Partnership's securities have
changed from the amounts reported in the Annual Report, such
changes have been or will be reflected on Statements of Changes in
Beneficial Ownership on Form 4 filed with the SEC. These documents
may be obtained free of charge from the sources indicated above.
Information regarding the participants in the proxy solicitation
and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the Form S-4,
the Proxy Statement/Prospectus and other relevant materials
relating to the proposed Corporate Reorganization filed with the
SEC. Common unitholders and other investors should read the Proxy
Statement/Prospectus carefully before making any voting or
investment decisions.
1 Russell 2000/3000 ($30
million minimum market cap): there are currently ~150
companies with a market cap below $200
million in the Russell indices; inclusion at
annual rebalance would result in potential index demand of
~12% of float
2 S&P Total Market Index (no minimum market cap):
inclusion would result in potential index demand of ~1% of
float
3 Other indices such as the S&P 600 Small Cap
(~$850 million minimum market cap,
~13% of float) and MSCI Investible Market Index (~$700 million minimum market cap, ~3% of float)
would require Summit to grow materially before gaining
eligibility
View original content to download
multimedia:https://www.prnewswire.com/news-releases/summit-advances-planned-conversion-to-c-corporation-to-facilitate-growth-and-value-creation-302173656.html
SOURCE Summit Midstream Partners, LP