15-Year Gas Gathering Agreement with
EQT
Share Buy Back of 25.3 Million ETRN Shares
from EQT
ETRN to Acquire EQM Midstream
Partners
New Dividend and Capital Allocation
Policy
Equitrans Midstream Corporation (NYSE: ETRN) and EQM Midstream
Partners, LP (NYSE: EQM), today, announced the following actions
and information, along with ETRN’s pro forma financial and capital
expenditure forecast:
- EQM and EQT Corporation (EQT) executed a 15-year gas gathering
agreement covering Pennsylvania and West Virginia
- Minimum Volume Commitment (MVC) steps-up to 3.0 Bcf per day and
incremental MVC increases begin with Mountain Valley Pipeline’s
(MVP) in-service
- Present value, using 10% discount rate (PV10), of MVC revenue
is approximately $2.1 billion higher under new 15-year gathering
agreement than under prior MVCs with EQT
- ETRN forecasts greater than 70% of total revenue from firm
reservation fees and MVCs beginning in 2021
- EQT benefits include the ability to optimize combo development,
lower per unit costs over time, and easing of approximately $250
million of letter-of-credit posting requirements
- ETRN will purchase and retire 25.3 million shares of ETRN
common stock from EQT for $52 million of upfront cash, with the
remaining consideration, which represents $196 million PV10, to be
paid through reduced gathering fees in the two years following
MVP’s in-service
- ETRN to acquire all outstanding public EQM common units in a
100% share-for-unit transaction, approved by the EQM Conflicts
Committee, in which each outstanding public common unit of EQM
would be exchanged for 2.44 shares of ETRN common stock
- ETRN intends to pay a $0.60 per share annual dividend, which
allows the company to quickly de-lever and provides significant
forecasted cash flow after total capital expenditures and
dividends
- ETRN forecasts $1.8 billion of cumulative free cash flow and
$1.0 billion of cumulative retained free cash flow, each a non-GAAP
supplemental financial measure, over 2021-2023
"Today is a transformational day for E-Train. We are taking
actions designed to rapidly and materially strengthen our balance
sheet," said Thomas F. Karam, ETRN chairman and chief executive
officer. "We have executed a 'blend, broaden, and extend' contract
with EQT, which will strengthen our partnership and position both
companies for success over the long-term.
“In addition, we are simplifying our structure to a single
C-Corp, as well as acquiring 25.3 million shares of ETRN from EQT.
As a single C-Corp entity, E-Train will have transparent corporate
governance, a larger investor base, and will strive to be among the
leading ESG companies in the midstream sector,” Karam
continued.
Diana Charletta, ETRN president and chief operating officer,
added “The new gathering agreement with EQT replaces over a dozen
separate gathering agreements and serves to strengthen our ongoing
partnership, a scenario that will be beneficial for both companies
now and in the future. By simplifying our relationship, EQT can
effectively execute their combo-development strategy, which in turn
will lead to improved ETRN capital efficiency through better
planning and optimized system designs. Equitrans' world-class
operations, coupled with our remarkably stable cash flows, simple
structure, and transparent path forward supports our ongoing
commitment to deliver shareholder value.”
See the Non-GAAP Disclosures section of this news release for
important disclosures regarding the non-GAAP supplemental financial
measures included in this news release, including information
regarding their most comparable GAAP financial measures.
Commercial Agreements with EQT
Gas Gathering Agreement EQM and EQT have executed a gas
gathering agreement that includes an increase in MVC, the addition
of over 100,000 undeveloped core West Virginia acres, a contract
extension, enhanced capital investment protections, and gathering
fee relief limited to the three years following the MVP in-service
date. The gas gathering agreement is effective immediately and
covers existing volumes and future development across EQT’s core
acreage positions in Pennsylvania and West Virginia. Gathering fee
relief is estimated to impact cash flow by approximately $125
million, $140 million, and $35 million, in the three years
following MVP's in-service, respectively.
Pennsylvania Water MVC EQM and EQT have agreed to a 5-year water
services MVC covering Pennsylvania that is projected to generate
$60 million of annual firm water revenue. The water MVC will
commence upon MVP’s in-service. The annual Pennsylvania water MVC
revenue is approximately $20 million per year higher than the
previously projected annual Pennsylvania water revenue.
Henry Hub Upside EQM and EQT have agreed to a structure in which
EQM will receive cash flow when NYMEX Henry Hub natural gas prices
exceed certain thresholds. For the three years following MVP’s
in-service, but in no case extending beyond December 2024, EQM is
entitled to receive from EQT an amount, in cash, equal to the
product of the MVC and 15% of every $0.01 / MMBtu that the average
quarterly NYMEX Henry Hub settlement price is above $2.50 / MMBtu
and, if applicable, above $2.70 / MMBtu during 2024. The annual
cash payment is capped at $60 million per year.
Projected Net Cash Flow Impact from Commercial Agreements with
EQT (assumes 12/31/20 MVP in-service):
$MM
2020
2021
2022
2023
Gas Gathering Agreement
$0
$(125)
$(140)
$(35)
PA Water MVC
$0
$20
$20
$20
Henry Hub Upside
$0
$0 - $60
$0 - $60
$0 - $60
Projected Net Cash Flow Impact
$0
$(105) - $(45)
$(120) - $(60)
$(15) - $45
Additional information on the commercial agreements with EQT
includes:
- Gathering MVC increased from 2.0 Bcf per day to 3.0 Bcf per
day
- Gathering MVC profile effective upon MVP’s in-service:
- Year 1 = 3.5 Bcf per day
- Year 2 = 3.75 Bcf per day
- Years 3 – 11 = 4.0 Bcf per day
- Years 12 – 15 = 3.0 Bcf per day
- $4.9 billion PV10 of revenue generated by new MVC, assuming MVP
in-service December 31, 2020, versus $2.8 billion PV10 of revenue
generated by prior MVCs with EQT
- Over 100,000 acres of new dedication in undeveloped northern
West Virginia core
- Investment to support the development of the new West Virginia
dedicated acreage is estimated to generate approximately $500
million of net present value (based on 10% discount rate)
- Capital investment protections through mileage limitations on
obligation to build
- Incremental compression investments will generate a separate
compression fee
- Incentive for volume growth is provided through $0.30/Dth
gathering rate on all volume in excess of the MVC
- Current contracts covering Ohio volumes and future development
are unchanged
ETRN Stock Purchase
ETRN and EQT have entered into agreements for ETRN to purchase
and retire 25.3 million shares of ETRN common stock from EQT. A
portion of the shares will be acquired for an upfront cash payment
of $52 million. The remaining consideration, which represents $196
million PV10, will be paid through reduced gathering fees of $145
million and $90 million in the two years following MVP’s
in-service, respectively. In the unlikely event that MVP is not
in-service by January 2022, EQT will have the option to forgo the
gathering fee relief consideration in exchange for a cash payment
of $196 million. The gathering fee relief associated with the ETRN
common stock purchase from EQT is independent from the gathering
fee relief associated with the terms of the gas gathering agreement
with EQT. The share purchases are expected to close in early
March.
The total consideration was determined using the 20-day volume
weighted average share price set on February 25, 2020 of $9.54 per
ETRN common share, plus an additional cash payment of $6.8
million.
ETRN Proposed Acquisition of EQM
ETRN and EQM have agreed to a share-for-unit exchange via merger
(Merger) in which each outstanding public common unit of EQM would
be exchanged for 2.44 shares of ETRN common stock. The exchange
ratio represents a 3% premium based on the volume weighted average
price for EQM and ETRN over the 20 days ending February 26, 2020.
The Merger is expected to close mid-year 2020, subject to customary
closing conditions and the approval of ETRN shareholders and EQM
unitholders.
After giving effect to the Merger and the purchase of 25.3
million ETRN common shares from EQT, there will be approximately
430 million ETRN common shares outstanding. Pro forma for the
transactions, the remaining 25.3 million ETRN common shares owned
by EQT will represent approximately 6% of total ETRN common shares
outstanding.
Other highlights of the Merger include:
- EQM will become a wholly owned subsidiary of ETRN upon the
closing of the Merger
- ETRN projects near zero cash taxes through at least 2023 and
minimal cash taxes through at least 2026
- The simplified C-Corp structure is expected to generate a
broader investor base and the increased float is expected to
improve trading liquidity
- Single C-Corp public security provides enhanced corporate
governance
- Increased opportunity for additional index inclusions
The terms of the Merger were negotiated, reviewed, and approved
by the Conflicts Committee of the Board of Directors of the general
partner of EQM and approved by the Board of Directors of the
general partner of EQM and the Board of Directors of ETRN. The EQM
Conflicts Committee is composed of independent members of the Board
of Directors of EQM’s general partner. The Merger is subject to
approval by ETRN shareholders and EQM unitholders.
Citi and Guggenheim Securities, LLC acted as financial advisors
and Latham & Watkins LLP acted as legal advisor to ETRN.
Evercore acted as financial advisor and Richards, Layton &
Finger, P.A. acted as legal advisor to the Conflicts Committee of
EQM.
Dividend and Capital Allocation Policy
ETRN expects to pay a quarterly dividend of $0.15 per share
beginning with the Q1 2020 dividend. EQM expects to pay a quarterly
distribution of $0.3875 per common unit for all quarters prior to
closing the Merger.
The new policy is designed to achieve a pro forma ETRN leverage
ratio of 4.0x exiting 2021 and positive retained free cash flow, a
non-GAAP supplemental financial measure, exiting 2021.
Additionally, the policy will quickly deliver a strong balance
sheet, creating the opportunity to return value to shareholders in
several ways, including, when appropriate, through share repurchase
programs and dividend increases.
Financing Plan and Liquidity
ETRN intends to retire the existing $600 million ETRN Term Loan
B and, in connection with the closing of the acquisition of EQM
common units, $600 million of outstanding EQM Series A Convertible
Preferred Units would be repurchased by EQM. The retirement of the
ETRN Term Loan B and the repurchase of the $600 million of EQM
Series A Convertible Preferred Units are expected to be financed
through debt transactions including borrowings under the EQM
revolving credit facility. Additionally, in connection with the
closing of the acquisition of EQM common units, the remaining $600
million of outstanding EQM Series A Convertible Preferred Units
will be exchanged for $600 million of newly issued ETRN Series A
Convertible Preferred Shares.
The existing EQM Senior Notes, EQM Term Loan A, and $3.0 billion
EQM revolving credit facility will remain outstanding after the
acquisition. As of December 31, 2019, there was approximately $2.4
billion of available liquidity under the EQM revolving credit
facility, which provides ample liquidity to execute the financing
plan for the transactions, as well as the remaining MVP capital
contributions and planned capital expenditures.
Terms of the new $600 million ETRN Series A Convertible
Preferred Shares include:
- Quarterly cash distributions based on a 9.75% annual coupon
through March 31, 2024, thereafter a floating coupon rate
- Beginning April 2021, the ETRN Series A Convertible Preferred
Shares will be convertible by the holders on a one-for-one basis
into ETRN common shares
- The ETRN Series A Convertible Preferred Shares will be priced
at $19.99 per share
Revenue Recognition
Revenue recognition of new gas gathering agreement with EQT
Under U.S. Generally Accepted Accounting Principles (GAAP), the new
contract with EQT will result in revenue recognition that will
differ from the actual cash received. The contracted gathering
rates gradually decrease over the first nine years, before
plateauing for the remaining years. However, under GAAP, revenue
will be recognized utilizing an average rate over the 15-year life
of the contract. The difference between the cash received and the
revenue recognized results in the deferral of revenue into future
periods.
The forecast below reflects the change in Adjusted EBITDA from
the new contract and the accounting treatment:
$B
2020(2)
2021
2022
2023
Previous EQM Adjusted EBITDA(1)
$1.38
No prior guidance
Deferred revenue
$(0.45)
$(0.11)
$(0.12)
$(0.28)
Pro Forma ETRN Adjusted EBITDA(1)
$0.92
$1.40
$1.46
$1.63
- Due to the forward-looking nature of these Adjusted EBITDA
measures, ETRN and EQM are unable to reconcile these non-GAAP
financial measures to their most directly comparable GAAP financial
measure, as ETRN and EQM are unable to project certain reconciling
items.
- Assumes 12/31/2020 in-service for MVP.
Financial Forecast
Pro Forma ETRN Forecast The forecast reflects the pro forma
anticipated impact of the agreements with EQT, the purchase and
retirement of 25.3 million ETRN shares from EQT, the pending
acquisition of EQM, the new dividend policy, and the financing
plan. The forecast assumes no cash flows from the Henry Hub upside
potential. ETRN forecasts that beginning in 2021, more than 70% of
annual total revenue will be generated from firm reservation fees
and MVCs.
$B (except leverage and coverage
metrics)
2020(1)
2021
2022
2023
Net Income Attributable to ETRN
$0.23
$0.43
$0.45
$0.49
Adjusted EBITDA
$0.92
$1.40
$1.46
$1.63
Distributable Cash Flow(2)
$0.90
$0.94
$1.04
$1.30
Total Capital Expenditures(3)
$1.27
$0.78
$0.62
$0.42
Free Cash Flow(2)
$(0.28)
$0.26
$0.54
$0.98
Retained Free Cash Flow(2)
$(0.69)
$0.00
$0.28
$0.72
Leverage Ratio(4)
5.6x
4.3x
4.0x
3.1x
Distributable Cash Flow Coverage
Ratio(5)
2.2x
3.6x
4.0x
5.0x
- Assumes 12/31/2020 in-service for MVP.
- Due to the forward-looking nature of these non-GAAP measures,
ETRN and EQM are unable to reconcile them to their most directly
comparable GAAP financial measures, as ETRN and EQM are unable to
project certain reconciling items.
- Includes forecasted capital contributions to Mountain Valley
Pipeline, LLC (MVP JV), 60% of Eureka Midstream capital
expenditures, and ongoing maintenance capital expenditures.
- ETRN Consolidated Debt / (ETRN pro forma Adjusted EBITDA +
deferred revenue).
- Assumes $0.60 per ETRN common share annual dividend for all
periods.
Conference Call
ETRN and EQM will host a conference call today, February 27,
2020, at 10:30 a.m. (ET) with security analysts to discuss the
transactions, financial and capital expenditure guidance, and other
business matters. A presentation webcast and audio live stream of
the call will be available on the internet via the Investors page
at www.equitransmidstream.com and www.eqm-midstreampartners.com.
Security analysts may access the call: U.S. tollfree at (866)
393-4306; and internationally at (734) 385-2616. The conference ID
is 5280796. An investor presentation regarding today’s announcement
is available via the companies' respective websites at
www.equitransmidstream.com and www.eqm-midstreampartners.com.
Call Replay: For 14 days following the call, an audio
replay will be available at (855) 859-2056 or (404) 537-3406. The
ETRN/EQM conference ID: 5280796.
NON-GAAP DISCLOSURES
Adjusted EBITDA
As used in this news release, Adjusted EBITDA means EQM’s or
ETRN’s pro forma net income, plus net interest expense,
depreciation, amortization of intangible assets, payments on the
preferred interest in EQT Energy Supply, LLC, non-cash long-term
compensation expense and transaction costs, proportional ownership
share of MVP JV EBITDA less equity income, AFUDC - equity, and
adjusted EBITDA attributable to noncontrolling interest.
Distributable Cash Flow
As used in this news release, distributable cash flow means EQM
and pro forma adjusted EBITDA, as applicable, plus deferred
revenue, less net interest expense excluding interest income on the
Preferred Interest, capitalized interest and AFUDC - debt, ongoing
maintenance capital expenditures net of expected reimbursements,
cash distributions earned by Series A preferred
unitholders/shareholders (as applicable), proportional ownership
share of MVP JV interest expense, and proportional ownership share
of MVP JV maintenance capital expenditures.
Free Cash Flow
As used in this news release, free cash flow means distributable
cash flow plus changes in net working capital, less growth capital
expenditures (excluding 40% of Eureka growth capital expenditures),
and capital contributions to MVP JV.
Retained Free Cash Flow
As used in this news release, retained free cash flow means free
cash flow less ETRN dividends.
Adjusted EBITDA, distributable cash flow, free cash flow and
retained free cash flow are non-GAAP supplemental financial
measures that management and external users of ETRN's and EQM’s
consolidated financial statements, such as industry analysts,
investors, lenders, and rating agencies, may use to assess:
- ETRN’s and EQM’s operating performance as compared to other
publicly traded companies in the midstream energy industry without
regard to historical cost basis or, in the case of adjusted EBITDA,
financing methods
- The ability of ETRN’s and EQM’s assets to generate sufficient
cash flow to make distributions to ETRN’s shareholders and EQM’s
unitholders, as applicable
- ETRN’s and EQM’s ability to incur and service debt and fund
capital expenditures and capital contributions
- The viability of acquisitions and other capital expenditure
projects and the returns on investment of various investment
opportunities
ETRN and EQM believe that adjusted EBITDA, distributable cash
flow, free cash flow, and retained free cash flow provide useful
information to investors in assessing ETRN's and EQM’s financial
condition and results of operations. Adjusted EBITDA, distributable
cash flow, free cash flow, and retained free cash flow should not
be considered as alternatives to net income, operating income, net
cash provided by operating activities or any other measure of
financial performance or liquidity presented in accordance with
GAAP. Adjusted EBITDA, distributable cash flow, free cash flow, and
retained free cash flow have important limitations as an analytical
tool because they exclude some, but not all, items that affect net
income, operating income and net cash provided by operating
activities. Additionally, because these non-GAAP metrics may be
defined differently by other companies in ETRN's and EQM’s
industry, ETRN's and EQM’s definitions of Adjusted EBITDA,
distributable cash flow, free cash flow, and retained free cash
flow may not be comparable to similarly titled measures of other
companies, thereby diminishing the utility of the measures.
Distributable cash flow, free cash flow and retained free cash flow
should not be viewed as indicative of the actual amount of cash
that ETRN and EQM have available for dividends and distributions,
as applicable, or that ETRN or EQM plan to distribute and are not
intended to be liquidity measures.
ETRN and EQM are unable to provide a reconciliation of projected
adjusted EBITDA from projected net income, the most comparable
financial measure calculated in accordance with GAAP, or projected
net cash provided by operating activities or a reconciliation of
projected distributable cash flow, free cash flow or retained cash
flow to net cash provided by operating activities, the most
comparable financial measure calculated in accordance with GAAP.
ETRN and EQM are unable to project net cash provided by operating
activities because this metric includes the impact of changes in
operating assets and liabilities related to the timing of cash
receipts and disbursements that may not relate to the period in
which the operating activities occurred. ETRN and EQM are unable to
project these timing differences with any reasonable degree of
accuracy to a specific day, three or more months in advance.
Therefore, ETRN and EQM are unable to provide projected net cash
provided by operating activities, or the related reconciliation of
each of projected distributable cash flow, projected free cash flow
and projected retained free cash flow to projected net cash
provided by operating activities. ETRN and EQM have not provided a
reconciliation of the projected adjusted EBITDA to the projected
net income attributable to ETRN because ETRN and EQM do not provide
guidance with respect to the intra-year timing of their or the MVP
JV's capital spending, which impact AFUDC – debt and – equity and
equity earnings, among other items, that are reconciling items
between adjusted EBITDA and net income attributable to ETRN. The
timing of capital expenditures is volatile as it depends on
weather, regulatory approvals, contractor availability, system
performance and various other items. Therefore, the reconciliation
of projected adjusted EBITDA from projected net income attributable
to ETRN is not available without unreasonable effort.
EQM has not provided projected net cash provided by operating
activities or reconciliations of its projected adjusted EBITDA and
projected distributable cash flow to projected net income and
projected net cash provided by operating activities, the most
comparable financial measures calculated in accordance with GAAP.
EQM is unable to project net cash provided by operating activities
because this metric includes the impact of changes in operating
assets and liabilities related to the timing of cash receipts and
disbursements that may not relate to the period in which the
operating activities occurred. EQM is unable to project these
timing differences with any reasonable degree of accuracy to a
specific day, three or more months in advance. Therefore, EQM is
unable to provide projected net cash provided by operating
activities, or the related reconciliation of projected
distributable cash flow to projected net cash provided by operating
activities. EQM has not provided the projected net income of the
acquired assets, the most comparable financial measure calculated
in accordance with GAAP, or a reconciliation of the projected
EBITDA of the acquired assets to the projected net income of the
acquired assets, because EQM does not forecast interest expense or
net income on acquisitions. Further, EQM does not provide guidance
with respect to the intra-year timing of its or MVP JV’s capital
spending, which impact AFUDC-debt and equity and equity earnings,
among other items, that are reconciling items between adjusted
EBITDA and net income. The timing of capital expenditures is
volatile as it depends on weather, regulatory approvals, contractor
availability, system performance and various other items. EQM
provides a range for the forecasts of net income, adjusted EBITDA
and distributable cash flow to allow for the variability in the
timing of spending and the impact on the related reconciling items,
many of which interplay with each other. Therefore, the
reconciliation of projected adjusted EBITDA to projected net income
is not available without unreasonable effort.
About Equitrans Midstream Corporation:
Equitrans Midstream Corporation (ETRN) has a premier asset
footprint in the Appalachian Basin and is one of the largest
natural gas gatherers in the United States. With a rich 135-year
history in the energy industry, ETRN was launched as a standalone
company in 2018 and, through its subsidiaries, has an operational
focus on gas gathering systems, transmission and storage systems,
and water services assets that support natural gas producers across
the Basin. ETRN is helping to meet America’s growing need for
clean-burning energy, while also providing a rewarding workplace
and enriching the communities where its employees live and work.
ETRN owns the non-economic general partner interest and a majority
ownership of the limited partner interest in EQM.
Visit Equitrans Midstream Corporation at
www.equitransmidstream.com
About EQM Midstream Partners:
EQM Midstream Partners, LP (EQM) is a growth-oriented limited
partnership formed to own, operate, acquire, and develop midstream
assets in the Appalachian Basin. As one of the largest gatherers of
natural gas in the United States, EQM provides midstream services
to producers, utilities, and other customers through its
strategically located natural gas transmission, storage, and
gathering systems, and water services to support energy development
and production in the Marcellus and Utica regions. EQM owns
approximately 950 miles of FERC-regulated interstate pipelines and
also owns and/or operates approximately 1,900 miles of high- and
low-pressure gathering lines.
Visit EQM Midstream Partners, LP at
www.eqm-midstreampartners.com
Cautionary Statements
This news release contains certain forward-looking statements
within the meaning of Section 21E of the United States Securities
Exchange Act of 1934, as amended (the Exchange Act), and Section
27A of the United States Securities Act of 1933, as amended (the
Securities Act), concerning ETRN and EQM, the proposed transactions
and other matters. These statements may discuss goals, intentions
and expectations as to future plans, trends, events, results of
operations or financial condition, or otherwise, based on current
beliefs of the management of ETRN and EQM, as well as assumptions
made by, and information currently available to, such management.
Words such as “could,” “will,” “may,” “assume,” “forecast,”
“position,” “predict,” “strategy,” “expect,” “intend,” “plan,”
“estimate,” “anticipate,” “believe,” “project,” “budget,”
“potential,” or “continue,” and similar expressions are used to
identify forward-looking statements. Without limiting the
generality of the foregoing, forward-looking statements contained
in this communication specifically include the expectations of
plans, strategies, objectives and growth and anticipated financial
and operational performance of ETRN, EQM and their respective
affiliates, including whether the proposed transactions will be
completed, as expected or at all, and the timing of the closing of
the proposed transactions; and whether the conditions to the
proposed transactions can be satisfied. These statements are
subject to various risks and uncertainties, many of which are
outside the parties’ control. Factors that could cause actual
results to differ materially from those in the forward-looking
statements include guidance regarding EQM's gathering, transmission
and storage and water service revenue and volume growth, including
the anticipated effects associated with the new Gas Gathering and
Compression Agreement and related documents entered into with EQT
Corporation (EQT) as described herein (collectively, the EQT Global
GGA); projected revenue (including from firm reservation fees and
MVCs) and expenses, and the effect on projected revenue associated
with the EQT Global GGA; the ultimate gathering fee relief provided
to EQT under the EQT Global GGA and related agreements; ETRN’s and
EQM’s ability to de-lever; forecasted adjusted EBITDA, net income,
distributable cash flow, free cash flow, retained free cash flow,
leverage ratio, coverage ratio, and deferred revenue; the weighted
average contract life of gathering, transmission and storage
contracts; infrastructure programs (including the timing, cost,
capacity and sources of funding with respect to gathering,
transmission and storage and water expansion projects); the cost,
capacity, timing of regulatory approvals, final design and targeted
in-service dates of current projects; the ultimate terms, partners
and structure of Mountain Valley Pipeline, LLC (MVP JV) and
ownership interests therein; expansion projects in EQM's operating
areas and in areas that would provide access to new markets; EQM's
ability to provide produced water handling services and realize
expansion opportunities and related capital avoidance; ETRN’s and
EQM's ability to identify and complete acquisitions and other
strategic transactions, including joint ventures, and effectively
integrate transactions (including Eureka Midstream Holdings, LLC
and Hornet Midstream Holdings, LLC) into ETRN’s and EQM's
operations, and achieve synergies, system optionality and accretion
associated with transactions, including through increased scale;
EQM's ability to access commercial opportunities and new customers
for its water services business, and the final terms of any
definitive water services agreement between EQT and EQM related to
the letter agreement between the parties in respect of water
services (Water Services Letter Agreement); any further credit
rating impacts associated with MVP, customer credit ratings
changes, including EQT's, and defaults, acquisitions and financings
and any further changes in ETRN’s or EQM’s respective credit
ratings; the timing and amount of future issuances or repurchases
of securities; effects of conversion of EQM securities in
connection with ETRN’s proposed acquisition of EQM or otherwise;
effects of seasonality; expected cash flows and MVCs, including
those associated with the EQT Global GGA and any definitive
agreement between EQT and EQM related to the Water Services Letter
Agreement; capital commitments; projected capital contributions and
capital and operating expenditures, including the amount and timing
of reimbursable capital expenditures, capital budget and sources of
funds for capital expenditures; dividend and distribution amounts
and timing and rates, including the effect thereon of completion of
the MVP project and expected changes announced by ETRN and EQM on
February 27, 2020 in connection with ETRN’s proposed acquisition of
EQM; the effect and outcome of pending and future litigation and
regulatory proceedings; changes in commodity prices and the effect
of commodity prices on EQM's business; liquidity and financing
requirements, including sources and availability; interest rates;
ETRN’s, EQM’s and EQM’s subsidiaries’ respective abilities to
service debt under, and comply with the covenants contained in,
their respective credit agreements; expectations regarding
production volumes in EQM's areas of operations; ETRN’s and EQM’s
abilities to achieve the anticipated benefits associated with the
execution of the EQT Global GGA and the Water Services Letter
Agreement; the effects of government regulation; and tax status and
position. These forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially
from projected results.
Accordingly, investors should not place undue reliance on
forward-looking statements as a prediction of actual results. ETRN
and EQM have based these forward-looking statements on current
expectations and assumptions about future events. While ETRN and
EQM consider these expectations and assumptions to be reasonable,
they are inherently subject to significant business, economic,
competitive, regulatory and other risks and uncertainties, many of
which are difficult to predict and beyond ETRN’s and/or EQM’s
control. The risks and uncertainties that may affect the
operations, performance and results of ETRN’s and EQM’s business
and forward-looking statements include, but are not limited to,
those set forth under (i) Item 1A, "Risk Factors" in ETRN's Annual
Report on Form 10-K for the year ended December 31, 2018 filed with
the Securities and Exchange Commission (the SEC), as may have been
updated by Part II, Item 1A, "Risk Factors," of ETRN’s subsequent
Quarterly Reports on Form 10-Q filed with the SEC, as well as Item
1A, "Risk Factors" in ETRN's Annual Report on Form 10-K for the
year ended December 31, 2019 to be filed with the SEC, and (ii)
Item 1A, "Risk Factors" in EQM's Annual Report on Form 10-K for the
year ended December 31, 2018 filed with the SEC, as may have been
updated by Part II, Item 1A, "Risk Factors," of EQM’s subsequent
Quarterly Reports on Form 10-Q filed with the SEC, as well as Item
1A, "Risk Factors" in EQM’s Annual Report on Form 10-K for the year
ended December 31, 2019 to be filed with the SEC. Any
forward-looking statement speaks only as of the date on which such
statement is made, and neither ETRN nor EQM intends to correct or
update any forward-looking statement, unless required by securities
laws, whether as a result of new information, future events or
otherwise.
All forward-looking statements speak only as of the date they
are made and are based on information available at that time. ETRN
and EQM assume no obligation to update forward-looking statements
to reflect circumstances or events that occur after the date the
forward-looking statements were made or to reflect the occurrence
of unanticipated events except as required by federal securities
laws. As forward-looking statements involve significant risks and
uncertainties, caution should be exercised against placing undue
reliance on such statements.
No Offer or Solicitation
This communication is not intended to and does not constitute an
offer to sell or the solicitation of an offer to subscribe for or
buy or an invitation to purchase or subscribe for any securities or
the solicitation of any vote in any jurisdiction pursuant to the
proposed transactions or otherwise, nor shall there be any sale,
issuance or transfer of securities in any jurisdiction in
contravention of applicable law. No offer of securities shall be
made except by means of a prospectus meeting the requirements of
Section 10 of the Securities Act. Subject to certain exceptions to
be approved by the relevant regulators or certain facts to be
ascertained, the public offer will not be made directly or
indirectly, in or into any jurisdiction where to do so would
constitute a violation of the laws of such jurisdiction, or by use
of the mails or by any means or instrumentality (including without
limitation, facsimile transmission, telephone and the internet) of
interstate or foreign commerce, or any facility of a national
securities exchange, of any such jurisdiction.
Additional Information and Where To Find It
In connection with their proposed transactions, ETRN and EQM
intend to file a registration statement on Form S-4, containing a
joint proxy statement/prospectus (the Form S-4) with the SEC. This
communication is not a substitute for the registration statement,
definitive proxy statement/prospectus or any other documents that
ETRN or EQM may file with the SEC or send to the shareholders of
ETRN or the unitholders of EQM in connection with the proposed
transactions. SHAREHOLDERS OF ETRN AND UNITHOLDERS OF EQM ARE URGED
TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE
FORM S-4 AND THE DEFINITIVE PROXY STATEMENT/PROSPECTUS INCLUDED
THEREIN IF AND WHEN FILED, AND ANY OTHER RELEVANT DOCUMENTS FILED
WITH THE SEC, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE PROPOSED TRANSACTIONS. When available, investors and security
holders will be able to obtain copies of these documents, including
the proxy statement/prospectus, and any other documents that may be
filed with the SEC with respect to the proposed transactions free
of charge at the SEC’s website, http://www.sec.gov or as described
in the following paragraph.
The documents filed with the SEC by ETRN may be obtained free of
charge at its website (www.equitransmidstream.com) or by requesting
them by mail at Equitrans Midstream Corporation, 2200 Energy Drive,
Canonsburg, PA 15317, Attention: Corporate Secretary, or by
telephone at (724) 271-7600. The documents filed with the SEC by
EQM may be obtained free of charge at its website
(www.eqm-midstreampartners.com) or by requesting them by mail at
EQM Midstream Partners, LP, 2200 Energy Drive, Canonsburg, PA
15317, Attention: Corporate Secretary, or by telephone at (724)
271-7600.
Participants in the Solicitation
ETRN, EQM, EQM’s general partner and their respective directors
and executive officers may be deemed to be participants in the
solicitation of proxies in connection with the proposed
transactions. Information regarding the directors and executive
officers of ETRN is contained in ETRN’s Form 10-K for the year
ended December 31, 2018 and definitive proxy statement filed with
the SEC on April 26, 2019. Information regarding the directors and
executive officers of EQM’s general partner is contained in EQM’s
Form 10-K for the year ended December 31, 2018. Additional
information regarding the interests of participants in the
solicitation of proxies in connection with the proposed
transactions will be included in the proxy
statement/prospectus.
Source: Equitrans Midstream Corporation
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200227005318/en/
Analyst inquiries: Nate Tetlow – Vice President,
Corporate Development and Investor Relations 412-553-5834
ntetlow@equitransmidstream.com
Media inquiries: Natalie Cox – Communications and
Corporate Affairs 412-395-3941 ncox@equitransmidstream.com
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