Summit Midstream closes drop-down assets from Summit Investments

On March 3, Summit Midstream Partners LP (NYSE: SMLP) closed the drop-down acquisition of all the issued and outstanding membership interests of Summit Utica, Meadowlark Midstream, and Tioga Midstream, each limited liability companies and indirect wholly owned subsidiaries of Summit Midstream Partners Holdings LLC (SMP Holdings), and SMP Holdings' 40% joint venture interest in each of Ohio Gathering and Ohio Condensate.

In conjunction with the close, SMLP made an initial $360 million cash payment to SMP Holdings. This initial payment was funded with proceeds from SMLP's upsized revolving credit facility, which, by an amendment executed in February, has an increased borrowing capacity of $1.25 billion effected by the closing of the 2016 drop down. 

A final payment will be made to SMP Holdings in 2020. This deferred payment will be equal to 6.5 multiplied by the average adjusted EBITDA of the drop-down assets for 2018 and 2019; less the initial payment; less all capital expenditures incurred for the drop-down assets between the initial close and Dec. 31, 2019; plus all adjusted EBITDA from the drop-down assets between the initial close and Dec. 31, 2019. 

The terms of these drop-down transaction were approved by the board of directors of SMLP's general partner and by the board’s Conflicts Committee, which consists entirely of independent directors. The Conflicts Committee engaged Evercore Partners to act as its independent financial advisor and to render a fairness opinion, and Akin Gump Strauss Hauer & Feld LLP to act as its legal advisor.

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