Antero closes drop-down transaction and private placement of common units

Antero Midstream Partners LP (NYSE: AM) and Antero Resources Corp. (NYSE: AR) have closed their $1.05 billion water business drop-down transaction, private placement of 12,898,000 Antero Midstream common units to a group of institutional investors, and net issuance of 10,988,421 Antero Midstream common units to Antero Resources.

In connection with the $1.05 billion transaction, the Partnership paid Antero Resources $552 million in cash and issued 23,886,421 common units representing limited partner interests in the Partnership to Antero Resources. Additionally, gross proceeds of $243 million from the Partnership's private issuance of 12,898,000 common units have been paid to Antero Resources, while the 23,886,421 of common units issued to Antero Resources has been reduced by the 12,898,000 common units issued in the private placement. Antero Resources now owns 116,870,335 combined common and subordinated units, representing 66.5% of the outstanding limited partner interests in Antero Midstream.

For Antero Midstream, the transaction is expected to be accretive to distributable cash flow per unit and the purchase price represents an 8.5x to 9.0x multiple on projected 2016 EBITDA for the water business. The Partnership's credit facility capacity was increased by $500 million to a total of $1.5 billion with the completion of the transaction. Pro forma for the transaction, Antero Midstream would have had $439 million in total debt and almost $1.1 billion of availability under its revolving credit facility as of June 30.

For Antero Resources, the total cash consideration paid by Antero Midstream to Antero Resources was $794 million plus a total of $250 million of potential earn out payments at the end of 2019 and 2020, contingent on meeting specific average fresh water delivery volume thresholds. Transaction proceeds have been used by Antero Resources to repay revolving credit facility borrowings. On a stand-alone basis, and pro forma for the transaction, Antero Resources would have had approximately $3.7 billion of total debt and $3.2 billion of liquidity as of June 30.

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