Tallgrass Energy GP, LP (NYSE:TEGP) Files An 8-K Entry into a Material Definitive Agreement
Item1.01.
| Entry into a Material Definitive Agreement. |
On March31, 2017, Tallgrass Energy Partners, LP, a Delaware
limited partnership (TEP), Tallgrass Development, LP, a
Delaware limited partnership (Tallgrass Development), and
Rockies Express Holdings, LLC, a Delaware limited liability
company and indirect wholly-owned subsidiary of Tallgrass
Development (Tallgrass Holdco), entered into a definitive
Purchase and Sale Agreement (the Purchase Agreement), to
which TEP acquired a 24.99% membership interest (the Subject
Interest) in Rockies Express Pipeline LLC, a Delaware limited
liability company (REX). REX owns the Rockies Express
Pipeline, a FERC-regulated natural gas pipeline system extending
from Opal, Wyoming and Meeker, Colorado to Clarington, Ohio.
Effective as of March31, 2017, and subject to the terms and
conditions of the Purchase Agreement, Tallgrass Holdco assigned
the Subject Interest to an indirect wholly-owned subsidiary of
TEP in exchange for total consideration from TEP of $400million
in cash. The Purchase Agreement contains customary
representations and warranties, indemnification obligations and
covenants by the parties, and a copy of the Purchase Agreement is
filed as Exhibit 10.1 to this Current Report on Form 8-K and is
incorporated herein by reference.
Prior to the acquisition of the Subject Interest (the
Transaction), TEP held a 25% membership interest in REX,
which it acquired in May 2016. Additionally, TEP manages the
daily operations of the Rockies Express Pipeline through its
wholly-owned subsidiary, Tallgrass NatGas Operator, LLC, which it
acquired in January 2017.
TEP funded the cash consideration payable in connection with the
closing of the Transaction from available capacity under its
existing Credit Agreement dated as of May17, 2013 with Barclays
Bank PLC, as administrative agent, and a syndicate of lenders (as
amended, modified, supplemented or waived to the date hereof, the
Credit Agreement). After giving effect to these
borrowings, TEP had $1.567billion in revolving loans outstanding
under the Credit Agreement and additional borrowing capacity of
$183million as of the close of business on March31, 2017.
Tallgrass Energy GP, LP, a Delaware limited partnership
(TEGP), is the managing member of and therefore controls
Tallgrass Equity, LLC, a Delaware limited liability company
(Tallgrass Equity). Tallgrass Equity, in turn, controls
TEP through the direct ownership of 50% of TEPs general partner,
Tallgrass MLP GP, LLC, a Delaware limited liability company
(TEP GP). As a result, under generally accepted accounting
principles, TEGP consolidates Tallgrass Equity, TEP GP, TEP and
TEPs subsidiaries. TEGP has no operations outside of its indirect
ownership interests in TEP. The Conflicts Committee of the Board
of Directors of TEP GP recommended approval of the Transaction to
the Board of Directors, which then approved the Transaction. The
Conflicts Committee, which is composed entirely of independent
directors, retained independent legal and financial advisors to
assist in evaluating and negotiating the Transaction.
The Purchase Agreement and the above descriptions have been
included to provide investors and security holders with
information regarding the terms of the Purchase Agreement. They
are not intended to provide any other factual information about
TEP, Tallgrass Development or Tallgrass Holdco or their
respective subsidiaries or affiliates or equity holders. The
representations, warranties and covenants contained in the
Purchase Agreement were made only for purposes of that agreement
and as of specific dates; were solely for the benefit of the
parties to the Purchase Agreement; and may be subject to
limitations agreed upon by the parties, including being qualified
by confidential disclosures made by each contracting party to the
other as a way of allocating contractual risk between them that
differ from those applicable to investors. Investors should be
aware that these representations, warranties and covenants or any
description thereof alone may not describe the actual state of
affairs of TEP, Tallgrass Development, Tallgrass Holdco or their
respective subsidiaries, affiliates, businesses or equity holders
as of the date they were made or at any other time.
The above description does not purport to be a complete
description of the Purchase Agreement and is qualified in its
entirety by the contents of the Purchase Agreement, a copy of
which is filed herewith as Exhibit 10.1.
| Item2.01. |
Completion of Acquisition or Disposition of Assets. |
The information provided above under Item 1.01 is incorporated
into this Item 2.01 by reference.
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| Item7.01. | Regulation FD Disclosure. |
On April3, 2017, TEP issued a press release announcing the
Transaction. A copy of the press release is furnished with this
Form 8-K as Exhibit 99.1 and incorporated into this Item 7.01 by
reference.
In addition, on April3, 2017, managements discussion and analysis
of financial condition and results of operations for REX is being
posted to the Tallgrass Energy website. Unitholders of TEP,
shareholders of TEGP and other interested parties are invited to
view those materials under the Webcasts Presentations section of
TEGPs investor relations page at www.tallgrassenergy.com.
In accordance with General Instruction B.2 to Form 8-K, the
information provided in this Item 7.01 and attached to this
Current Report on Form 8-K as Exhibit 99.1 shall be deemed to be
furnished and shall not be deemed to be filed for purposes of
Section18 of the Securities Exchange Act of 1934, as amended (the
Exchange Act), or otherwise subject to the liabilities of
that section, nor shall it be deemed incorporated by reference in
any filing under the Securities Act of 1933, as amended, or the
Exchange Act, regardless of the general incorporation language of
such filing, except as expressly set forth by specific reference
in such filing.
| Item9.01. | Financial Statements and Exhibits. |
The following financial statements, pro forma financial
information and exhibits are being filed in connection with the
Transaction:
(a)Financial Statements of Rockies Express Pipeline
LLC
Audited Financial Statements as of December31, 2016 and 2015, and
for the years ended December31, 2016, 2015, and 2014, including
the notes related thereto, are incorporated into this Item
9.01(a) by reference to Item 15 of TEGPs Annual Report on Form
10-K filed on February15, 2017.
(b)Pro Forma Financial Information
Unaudited pro forma condensed consolidated financial statements
of TEGP as of and for the year ended December31, 2016, and the
notes related thereto, are filed with this Form 8-K as Exhibit
99.2 and incorporated into this Item 9.01(b) by reference.
(d)Exhibits
|
EXHIBIT NUMBER |
DESCRIPTION |
|
| 10.1 |
Purchase and Sale Agreement, dated March31, 2017, by and among Tallgrass Energy Partners, LP, Rockies Express Holdings, LLC and Tallgrass Development, LP (incorporated by reference to Exhibit 10.1 to Tallgrass Energy Partners, LPs Current Report on Form 8-K filed on April3, 2017). |
|
| 99.1 | Press release issued by Tallgrass Energy Partners, LP. | |
| 99.2 |
Unaudited Pro Forma Condensed Consolidated Financial Statements of Tallgrass Energy GP, LP as of and for the year ended December31, 2016, including the notes related thereto. |
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About Tallgrass Energy GP, LP (NYSE:TEGP)
Tallgrass Energy GP, LP is a limited partnership company. The Company, through Tallgrass Energy Partners, LP (TEP), provides crude oil transportation to customers in Wyoming, Colorado, and the surrounding regions through Pony Express. Its business segments include Crude Oil Transportation & Logistics Segment, which is engaged in the ownership and operation of a crude oil pipeline system; Natural Gas Transportation & Logistics Segment, which is engaged in ownership and operation of FERC-regulated interstate natural gas pipelines and integrated natural gas storage facilities, and Processing & Logistics Segment, which is engaged in the ownership and operation of natural gas processing, treating and fractionation facilities, the provision of water business services primarily to the oil and gas exploration and production industry and the transportation of natural gas liquids (NGL). The Company, through TEP, owns and operates natural gas processing plants in Casper and Douglas. Tallgrass Energy GP, LP (NYSE:TEGP) Recent Trading Information
Tallgrass Energy GP, LP (NYSE:TEGP) closed its last trading session up +0.37 at 28.76 with 105,028 shares trading hands.