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EQM to take majority stake in Eureka and Hornet
Posted on Thursday, 14 March 2019 14:45
Equitrans Midstream and EQM Midstream Partners have agreed to acquire a 60.0 per cent stake in Eureka Midstream Holdings and all of Hornet Midstream in a deal that is worth a combined USD 1.03 billion.

Under the terms of the deal, the companies are paying USD 860.00 million in cash and USD 170.00 million through assumed pro-rata debt.

EQM will finance the deal through the issue of USD 1.10 billion of newly issued series A convertible preferred units, which are expected to close simultaneously with the completion of the transaction, due on or around 15th April and subject to regulatory approvals.

BlackRock, GSO Capital Partners and Magnetar Capital have agreed to buy the shares, as well as supporting investors Carlyle Group and Foundation Infrastructure Partners.

Following a two-year period, the convertible units held will be on a one-for-one basis into EQM common stock priced at USD 48.77 per item, a 20.0 per cent premium to the 20-day volume weighted average price prior to the announcement.

The acquirors believe the targets to be attractive, fee-based gas gathering systems with growing cash flows and underpinned by long-term contracts from a diverse mix of active producers.

It will add around 200,000 acres in core Marcellus and Utica development areas with minimum volume commitments of roughly 50.0 per cent of current throughput.

Eureka is a 190-mile gathering header pipeline system in Ohio and West Virginia that services both dry Utica and wet Marcellus production.

Thomas Karam, chief executive of EQM, said: “This bolt-on acquisition, within our footprint, leverages our existing assets and core operating competencies and is the first step in executing our strategy to grow into a top-tier midstream company.”

Diana Charletta, the company’s head of operations, added: “With the ongoing natural gas development activity surrounding the Eureka system, we see significant value in leveraging our fast-growing water services business. We want to be the low-cost provider and partner of choice across all aspects of our business.

“This acquisition will help us achieve our goal by providing added scale and by allowing us to facilitate new commercial opportunities to deliver innovative and cost-effective solutions for our customers.”

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