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Eagle Rock in Midstream Sale

Source: www.gulfoilandgas.com 12/23/2013, Location: North America

Eagle Rock Energy Partners, L.P. announced that it has entered into a definitive agreement to contribute its midstream business to Regency Energy Partners LP (Regency) for total consideration of up to $1.325 billion.

Highlights of the transaction, which has been unanimously approved by the Board of Directors, include the following:
Eagle Rock will receive total consideration of up to $1.325 billion, subject to certain closing conditions, consisting of $200 million of newly-issued Regency common units and a combination of cash and assumed debt Regency will conduct an offer to exchange Eagle Rock's $550 million of outstanding senior unsecured notes into an equivalent amount of Regency senior unsecured notes with the same tenor, coupon and a comparable covenant package. The cash portion of the purchase price will be reduced by the amount of notes exchanged subject to a 10% adjustment factor such that if all $550 million of bonds are exchanged, the total consideration will equal $1.27 billion ($1.325 billion less $55 million) consisting of $200 million in Regency units, $550 million of assumed debt and $520 million of cash proceeds.

Following the consummation of the transaction, which is expected to close in the first half of 2014, Eagle Rock will be a pure-play upstream MLP with a strong balance sheet and ample liquidity for future growth. The Partnership intends to use the cash proceeds from the contribution of its midstream business to pay down borrowings under its revolving credit facility. Pro-forma for the sale, the Partnership anticipates its Total Leverage Ratio will be under 1.75x.

"This transaction is consistent with our stated goals of simplifying our structure and reducing our debt balances," said Joseph A. Mills, Eagle Rock's Chairman and Chief Executive Officer. "We are excited to announce this transformative transaction for Eagle Rock, which unlocks the value of our midstream business and positions the Partnership for future growth as a pure-play upstream MLP."

Terms and Conditions
The transaction is subject to the approval of Eagle Rock's unitholders, Hart-Scott-Rodino Antitrust Improvements Act of 1976 approval and other customary closing conditions.

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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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