Antero Midstream Partners Mergers and Acquisitions Presentation Deck
AR Capital Return - Funding Options
Benefits
Considerations
• AR net leverage
projected at 2.1x at
year end 2018,
allowing for capacity if
target hard 2.5x
leverage cap
AR Debt Issuance
(Leverage Capacity)
• Material decrease in
net leverage in 2019
down to 1.5x by year
end
• Hedge book, AM units
and no near term
maturities supportive of
balance sheet strength
.
AR not generating
material FCF until 2019
* Need to maintain IG
ratings trajectory
Larger programs
(>5% of market cap)
more likely to have
significant share price
impact
"
.
Largest source of
potential proceeds
($2.7Bn market value
of AM units)
* Most commonly cited
by investor as potential
funding source
AR Sale of AM
Secondary
* Potentially not
receiving full value for
AM units today in AR
share price
+
Minimal impact to pro
forma net leverage
+ Friction costs to
execute given poor
MLP market conditions
• Limited ability to
execute in size
(>$350MM)
·
Ongoing AM
distributions contribute
to FCF at AR
. Long term value in
owning AM units
+
Sequencing /
disclosure issues if also
pursing simplification
transaction
Private Secondary to
Infra / Pension
Large pool of
infrastructure capital
seeking contracted
midstream
opportunities
• Yield and cash flow
growth profile should
be highly attractive to
investors
Offers ability for
investor to acquire
large block of units at
one time
+
• Investors typically
seeking structured
opportunities with
preferred or conversion
features
Partnership units not
preferred investment
structure
• Investor desire to
acquire somewhat
illiquid MLP position
Likely seek discount
to current market price
+
AR Water Earn-Out
Monetization
Brings forward
potentially $250MM of
proceeds AR is due to
receive in 2019 and
2020
• Unlikely receive full
value in AR share price
today
• No increase in
leverage
Likely some discount
to nominal value of the
earn out
. Contributes to FCF
profile in 2019 and
2020
AR Use of AM
Distributions
• New financial policy of
tying AR share
repurchase to AM
distributions received
by AR
+ Clear identification of
on going share
repurchase funds
. Modest impact on pro
forma leverage
AM distributions
growing from $170MM
in 2018 to $282MM in
2020
AM distributions not
true FCF until 2020+
⠀
Any sell downs of AM
shares would result in
decreased AR share
repurchase
Antero
May be more
attractive uses of
capital at other times
than share repurchase
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