Antero Midstream Partners Mergers and Acquisitions Presentation Deck
Tier I Potential Consolidation Scenarios
Overview
Benefits
Considerations
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AMGP Acquisition of AM
AMGP acquires AM in all-equity transaction thereby eliminating
the MLP
.
Dramatically improves "mis-alignment" issue; positive for AR
Compelling Value proposition for both AM and AMGP
- Analysis indicates AMGP will hold value and even improve
C-Corp structure provides larger float, liquidity and access to
institutional capital, reducing perceived overhang at AM today
(i.e. from AR's significant ownership of AM)
* Lowers AM cost of capital due to elimination of IDRs
Research analysts have done pre-conditioning by referring to the
AMGP acquisition of AM as most logical combination structure
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- AM receives up-front premium and accretion to distributions
beginning in year 4
- Tax shelter provided by step-up enhances DCF
- AMGP gets 100%+ up-front accretion and still enjoys 25%
higher distributions 5 years out
• Taxable to AM unitholders, though average unitholder has
relatively high basis in AM units (-$24/ unit)
Taxable to AR, though fully shielded by NOLS
* AM distribution dilution in 2018-2020
Potentially seen as reversal of AMGP IPO messaging
Requires AMGP vote; need legal input regarding majority of
minority voting
. AMGP eliminates AM's incentive distribution rights in exchange
for newly issued AM common units and / or cash
* Consistent with current market preference for simplifications /
removals of IDRs
-
+
+
AM Acquisition of AMGP IDRS
+
Lowers AM cost of capital due to elimination of IDRs
Creates "Up-C" structure for AM, and ability to raise midstream
capital at C-Corp and MLP levels
Significant near term accretion to AMGP given yield spread
difference between AMGP and AM
Dilutive to AM and AR for first few years but becomes accretive
longer term
* No tax impact to AR, AMGP or AM shareholders / unitholders
* Near-term LP dilution to AM holders (including AR), particularly
with respect to "18E-19E DPU; may require coverage reduction,
non-distribution bearing units or cash to mitigate dilution
* IDRs not materially impacting AM cost of capital at current time
* Still maintains complexity of three public currencies and doesn't
fully address perception of misalignment between AR and
AMGP
* No tax step-up to AM (unless cash is used)
.
Requires AMGP vote; need legal input regarding majority of
minority voting
Analyzed in Detail
Antero
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