Summit Midstream Partners, LP Announces Agreement With TPG For Purchase Of Up To $80M In Redeemable, Preferred Interests In Summit Permian Transmission Holdco

Summit Midstream Partners, LP (NYSE:SMLP) announced today that it has entered into agreements with TPG, a global alternative asset firm ("TPG"), for the purchase of up to $80 million of redeemable, preferred

Benzinga · 12/30/2019 12:00

Summit Midstream Partners, LP (NYSE:SMLP) announced today that it has entered into agreements with TPG, a global alternative asset firm ("TPG"), for the purchase of up to $80 million of redeemable, preferred interests in Summit Permian Transmission Holdco, LLC ("Permian Holdco"), a newly created, unrestricted subsidiary of SMLP that indirectly owns SMLP's 70% interest in Double E Pipeline, LLC ("Double E"). In connection with the transaction, TPG will fund the next $80 million of Permian Holdco's capital calls associated with Double E. The investment by TPG will be made by TPG Energy Solutions ("TES"), the firm's energy-specific structured equity vehicle. 

Upon receipt of Double E's Federal Energy Regulatory Commission ("FERC") 7(c) certificate, which is expected in the third quarter of 2020, SMLP plans to raise a non-recourse commercial bank financing to fund the substantial majority of the SMLP's remaining capital obligations. In total, SMLP expects that the preferred equity financing and the bank financing will cover more than 70% of SMLP's $350 million funding obligation associated with Double E. 

Permian Holdco will pay a quarterly distribution rate of 7% on the outstanding preferred units and has the option to pay this distribution in-kind during the construction period. In addition, Permian Holdco and TPG have agreed to certain features that allow Permian Holdco to issue, and TPG to purchase, up to an additional $60 million of preferred units, under the same terms and conditions.

Permian Holdco has the right to optionally redeem TPG's preferred interests at any time in whole or in part for cash over the next seven years, subject to a predetermined redemption price.  SMLP will continue to lead the development, permitting, and construction of Double E, and will operate the pipeline upon commissioning.