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Crestwood Equity Partners LP has put to a shareholder vote an offer to raise the redemption price for preferred units under a pending merger with Energy Transfer LP.
Midstream gas operator Crestwood signed August 16 an agreement under which Energy Transfer would absorb it as a subsidiary. Besides Energy Transfer, the pact was inked with Energy Transfer’s wholly owned subsidiary Pachyderm Merger Sub LLC and Energy Transfer’s sole general partner LE GP LLC, according to a filing with the USA Securities and Exchange Commission (SEC).
Subject to investor vote, the deal offers 2.07 limited partner interests in Energy Transfer for every Crestwood common unit, to be counted as common stocks upon Crestwood’s absorption into Energy Transfer. For preferred shares, holders have the option to convert these to common shares under a conversion ratio of one common share per 10 preferred shares. Another choice for preferred shareholders is to convert their shares to “substantially equivalent units”. A third alternative is to sell these preferred shares for $9.218573 in cash per share for conversion into Energy Transfer common units using the same exchange ratio, according to the “Agreement and Plan of Merger” deposited before the SEC.
The option to sell for cash is now the subject of a consent solicitation opened by Crestwood this week raising the per-share price to $9.857484. Applicable to preferred shareholders as of September 22, the consent solicitation ends October 17. The new price offer is above the September 22 closing price of Crestwood preferred units, which was $9.57 per unit.
Legible voters represent 9.25 percent of Houston, Texas-based Crestwood’s outstanding preferred units, it said in a press release Wednesday.
Under the consent solicitation Crestwood is also offering to pay a fee of $0.182546 per share for yes voters.
The amendment of the terms of the merger entails changing the agreement that governs Crestwood as a partnership. “The Proposed Amendment would permit us to increase the redemption price payable to holders making a cash redemption election pursuant to Section 5.8(e)(ii)(D) of the Partnership Agreement in connection with the merger from 101 percent of the Preferred Unit Price (or $9.218573 per Preferred Unit) to 108 percent of the Preferred Unit Price (or $9.857484 per Preferred Unit)”, Crestwood said in a filing with the SEC.
Crestwood said the offer to raise the redemption price has been made on the direction of Energy Transfer.
New York-listed Crestwood initially put the value of the all-equity merger transaction at about $7.1 billion including $3.3 billion in assumed debt, basing on its closing price August 15. “Upon closing [of the transaction], Crestwood common unitholders are expected to own approximately 6.5 percent of Energy Transfer’s outstanding common units”, it said in a press release August 16.
Crestwood owns gas assets that span gathering, processing and logistics—mostly located in the Delaware Basin, the Powder River Basin and the Williston Basin, according to information on its website.
Energy Transfer meanwhile counts itself as “one of America’s largest energy portfolios with assets in 41 states”, with operations in oil and gas transport and storage, as stated on Energy Transfer’s website.
To contact the author, email jov.onsat@rigzone.com
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