Summit Midstream Partners, LP’s $80 Million Preferred Equity Financing

Baker Botts LLP represented Summit Midstream Partners in its agreement with TPG Capital, L.P. Kirkland & Ellis counseled TPG on its preferred equity investment.

On December 30, 2019, Summit Midstream Partners, LP (“SMLP”), announced that on December 24, 2019, it entered into agreements with an affiliate TPG Capital, L.P., a global alternative asset firm (“TPG”), for the purchase of up to $80 million of redeemable, preferred interests (the “Preferred Units”) in a newly created, unrestricted subsidiary of SMLP  that indirectly owns SMLP’s 70% interest in Double E Pipeline, LLC (“Double E”), a joint venture with Exxon Mobil. In connection with the transaction, TPG will fund the next $80 million of SMLP’s capital calls associated with Double E. The investment by TPG will be made by TPG Energy Solutions, the firm’s energy-specific structured equity vehicle.

The Preferred Units are entitled to a quarterly distribution rate of 7% on the outstanding Preferred Units, which may be paid in-kind during the construction period for Double E.  In addition, the transaction contains an accordion feature that allows TPG to purchase up to an additional $60 million of Preferred Units under the same terms and conditions. The Preferred Units may be redeemed at any time in whole or in part for cash over the next seven years, subject to a predetermined redemption price. SMLP will continue to lead the development, permitting, and construction of Double E, and will operate the pipeline upon commissioning.

The Baker Botts team was led by Jason Rocha (Picture) and included Joshua Davidson, Sarah Dodson, Jude Dworaczyk, Rachel Collier, Daniel Tristan, Mike Bresson and Jared Meier.

The Kirkland team was led by transactional partners Adam Larson and Kevin Crews; and included transactional associates Scott Delaney, Austin Elder and Mike Pangrac; tax partners David Wheat and Lane Morgan; environmental partner Jonathan Kidwell and associate James Dolphin; energy & infrastructure partner Brooksany Barrowes and associate Drew Stuyvenberg; debt finance partner Kimberly Perdue and associate Aisha Noor; and capital markets associate Eugenio J. Cárdenas.

Involved fees earner: Michael Bresson – Baker Botts; Rachel Collier – Baker Botts; Joshua Davidson – Baker Botts; Sarah Dodson – Baker Botts; Jude Dworaczyk – Baker Botts; Jared Meier – Baker Botts; Jason Rocha – Baker Botts; Daniel Tristan – Baker Botts; Brooksany Barrowes – Kirkland & Ellis; Eugenio Cardenas – Kirkland & Ellis; Kevin Crews – Kirkland & Ellis; Scott Delaney – Kirkland & Ellis; James Dolphin – Kirkland & Ellis; Austin Elder – Kirkland & Ellis; Jonathan Kidwell – Kirkland & Ellis; Adam Larson – Kirkland & Ellis; Lane Morgan – Kirkland & Ellis; Aisha Noor – Kirkland & Ellis; Mike Pangrac – Kirkland & Ellis; Kimberly Perdue – Kirkland & Ellis; Drew Stuyvenberg – Kirkland & Ellis; David Wheat – Kirkland & Ellis;

Law Firms: Baker Botts; Kirkland & Ellis;

Clients: Summit Midstream Partners, LP; TPG Capital;