Antero Midstream GP LP (AMGP) and Antero Midstream Partners LP (AM) announced that they have entered into a definitive agreement for AMGP to acquire all outstanding AM common units, both those held by the public and those held by Antero Resources (AR) , in a stock and cash transaction. In connection with the transaction, AMGP will convert into a corporation and the combined entity will be renamed Antero Midstream Corporation. Under the terms of the agreement, Antero Midstream Partners public unitholders will be entitled to receive a combination of $3.415 in cash and 1.635 shares of New AM stock per AM unit owned, resulting in aggregate consideration valued at $31.41 per AM unit, based on the October 8, 2018 closing price. Antero Resources will be entitled to receive a combination of $3.00 in cash and 1.6023 shares of New AM stock for each AM unit owned, resulting in aggregate consideration valued at $30.43 per AM unit, based on the October 8, 2018 closing price. AM public unitholders will be entitled to elect to receive their merger consideration in all cash, all stock, or a combination of cash and stock, and AR will have the ability to elect to take a larger portion of its merger consideration in cash if the AM public unitholders elect to receive more stock than the mixed election consideration, in each case subject to pro ration to ensure that the aggregate amount of cash consideration paid to all AM unitholders equals approximately $598 million. The transaction has been negotiated and recommended by the Conflicts Committees of AMGP and Antero Midstream Partners and the Special Committee of Antero Resources and approved by all three Boards of Directors. Under the terms of the simplification agreement, AMGP will acquire 100% of Antero Midstream Partners' 188.1 million fully diluted common units outstanding, including 98.9 million common units owned by Antero Resources. AM public unitholders will be entitled to receive a combination of $3.415 in cash and 1.635 shares of New AM stock per AM unit owned, resulting in aggregate consideration valued at $31.41 per AM unit, based on the October 8, 2018 closing price. The all-in consideration for AM public unitholders represents a premium of 7% based on the closing price as of October 8, 2018 and a premium of 19% based on closing prices as of February 23, 2018 prior to the announcement of the Special Committee formation. Antero Resources will be entitled to receive a combination of $3.00 in cash and 1.6023 shares of New AM stock for each AM unit owned, resulting in aggregate consideration valued at $30.43 per AM unit, based on the October 8, 2018 closing price. AM public unitholders will be entitled to elect to receive their merger consideration in all cash, all stock or a combination of cash and stock. AR will have the ability to elect to take a larger portion of its merger consideration in cash if the AM public unitholders elect to receive more stock consideration than outlined in the mixed election, subject to pro ration, to ensure that the aggregate amount of cash consideration paid to all AM unitholders equals approximately $598 million. Following the AM public unitholders' election of their consideration, Antero Resources' can elect additional cash consideration, if available, in lieu of stock consideration. Following the simplification, New AM will eliminate all IDRs in AM and the Series B units, which represent 10-year profits interests in Antero IDR Holdings, the entity that holds all of the outstanding IDRs in AM. The cash consideration will be funded at closing by utilizing borrowings under an amended AM credit facility. AM is in the process of exercising the accordion feature on its credit facility, which would increase capacity from $1.5 billion to $2.0 billion. New AM expects to maintain a strong balance sheet flexing to just over 3.0x net debt to adjusted EBITDA post-closing at the end of the first quarter of 2019 and de-levering into the mid two-times range by 2020. Consistent with AM's previous outlook, New AM does not anticipate a need to access the public equity markets to fund its previously disclosed $2.7 billion in organic growth opportunities from 2018 through 2022.
