HOUSTON, July 27, 2018 /PRNewswire/ -- American Midstream
Partners, LP (NYSE: AMID) ("American Midstream" or the
"Partnership") today announced a revised capital allocation
strategy that is intended to significantly reduce leverage, provide
capital for strategic growth opportunities, and create long-term
value.
As part of the revised capital allocation strategy the
Partnership has determined the most prudent sources of accretive
growth capital are proceeds from the sale of non-core assets and
the retention of an increased portion of operating cash flow
through the reduction of its common unit distribution.
Exclusive of the potential combination with Southcross Energy
Partners, L.P. and Southcross Holdings LP, the Partnership has
identified attractive organic growth projects across all core
segments. These opportunities will enable the Partnership to
continue building an integrated midstream company with greater
scale and density in its core operating areas as well as expanding
its reach across growing resource developments. The identified
projects will focus on the continued development of infrastructure
along the Gulf Coast, which would further the Partnership's ability
to participate in the growing export market offshore and to
Mexico. The aggregate of
non-acquisition related growth opportunities ranges from
$200 to $300
million through 2020 at a blended multiple near 5-times
expected EBITDA.
The Partnership's management team and Board evaluated and
continue to evaluate numerous strategies to maximize long-term
value. Equity capital market constraints for master limited
partnerships and the availability of equity capital at acceptable
costs and in sufficient quantities, warrants retaining an increased
portion of operating cash flow to support growth of the
Partnership. Additionally, the Partnership anticipates materially
increasing proceeds from non-core asset sales, including previously
announced terminal divestitures. Together, cash flow retention and
asset sales will enable the Partnership to reallocate capital to
meaningful growth opportunities, while promoting balance sheet
flexibility, substantially reducing indebtedness and minimizing the
need to raise external equity capital.
Consistent with the revised capital allocation strategy, the
Partnership today announced that the Board of Directors of its
general partner declared a quarterly cash distribution of
$0.1031 per common unit, or
$0.4125 per common unit annualized,
with respect to the second quarter of 2018. The distribution will
be paid on August 14, 2018 to
unitholders of record as of the close of business on August 6, 2018. The Partnership and the Board of
Directors of its general partner will continue to evaluate its
distribution policy as it executes its plans for growth,
deleveraging, and capital access.
Based on the first-half of 2018, the Partnership's assets are
expected to generate annualized EBITDA between $190 and $200
million. The Partnership anticipates providing 2019 guidance
upon the completion of the customary budget cycle in late 2018.
BALANCE SHEET DELEVERAGING PLAN
The Partnership continues to progress its deleveraging plan with
the previously announced sale of its marine products terminals for
$210 million and refined products
terminals for $138.5 million. The
sale of the marine products terminals is expected to close in early
August of 2018. Due to delays in obtaining federal regulatory
approval, the Partnership is evaluating options as it relates to
the sale of the refined products terminals.
Further, the Partnership has engaged in a review of additional
non-core assets and has identified approximately $350 - $400 million
of other high value non-core assets that are geographically
peripheral to the Partnership's core footprint or could offer
greater strategic value to third parties. The Partnership expects
potential asset sales to close between the third quarter of 2018
and the third quarter of 2019.
Completion of the asset sale program is expected to provide the
Partnership with a more flexible capital structure and enable the
Partnership to target a long-term leverage ratio near 4-times by
mid-2019. These improved financial metrics should provide the
Partnership an improved credit rating, which would further reduce
borrowing costs. In addition, the reduction in common unit
distributions is expected to generate approximately $65 million of additional, non-dilutive capital
per year that the Partnership can deploy towards accretive growth
projects and reduce debt.
About American Midstream Partners, LP
American Midstream Partners, LP is a growth-oriented limited
partnership formed to provide critical midstream infrastructure
that links producers of natural gas, crude oil, NGLs, condensate
and specialty chemicals to end-use markets. American Midstream's
assets are strategically located in some of the most prolific
offshore and onshore basins in the Permian, Eagle Ford,
East Texas, Bakken and Gulf Coast.
American Midstream owns or has an ownership interest in
approximately 5,100 miles of interstate and intrastate pipelines,
as well as ownership in gas processing plants, fractionation
facilities, an offshore semisubmersible floating production system
with nameplate processing capacity of 90 MBbl/d of crude oil and
220 MMcf/d of natural gas; and terminal sites with approximately
6.7 MMBbls of storage capacity.
For more information about American Midstream Partners, LP,
visit: www.americanmidstream.com. The content of our website is not
part of this release.
Forward-Looking Statements
This press release includes "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995, Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act of 1934, as amended. We have used the words
"anticipate," "could," "designed," "expect," "intend," "may,"
"opportunity" "plan," "should," "strategy," "will," "would," and
similar terms and phrases to identify forward-looking statements in
this press release. Although we believe the assumptions upon which
these forward-looking statements are based are reasonable, any of
these assumptions could prove to be inaccurate and the
forward-looking statements based on these assumptions could be
incorrect. Many of the factors that will determine these results
are beyond our ability to control or predict. These factors include
the risk factors described in Part I, Item 1A. of our Annual Report
on Form 10-K for the year ended December 31,
2017, filed with the SEC on April 9,
2018, and our other filings with the SEC. All future written
and oral forward-looking statements attributable to us or persons
acting on our behalf are expressly qualified in their entirety by
the previous statements. The forward-looking statements herein
speak as of the date of this press release. We undertake no
obligation to update such statements for any reason, except as
required by law.
This notice serves as qualified notice to nominees as provided
for under Treasury Regulation Section 1.1446-4(b)(4) and
(d). Please note that 100 percent of American Midstream
Partners, LP's distributions to foreign investors are attributable
to income that is effectively connected with a United
States trade or business. Accordingly, all American
Midstream Partners, LP 's distributions to foreign investors
are subject to federal income tax withholding at the highest
effective tax rate for individuals or corporations, as
applicable. Nominees, and not American Midstream
Partners, LP, are treated as withholding agents responsible for
withholding distributions received by them on behalf of foreign
investors.
Non-GAAP Measures
This news release includes supplemental non-GAAP financial
measures "Adjusted EBITDA" You should not consider Adjusted EBITDA
in isolation or as a substitute for, or more meaningful than
analysis of, our results as reported under GAAP. Adjusted EBITDA
may be defined differently by other companies in our industry. Our
definitions of this non-GAAP financial measures may not be
comparable to similarly titled measures of other companies, thereby
diminishing its utility.
Adjusted EBITDA is a supplemental non-GAAP financial measure
used by our management and external users of our financial
statements, such as investors, commercial banks, research analysts
and others, to assess: the financial performance of our assets
without regard to financing methods, capital structure or
historical cost basis; the ability of our assets to generate cash
flow to make cash distributions to our unitholders and our general
partner; our operating performance and return on capital as
compared to those of other companies in the midstream energy
sector, without regard to financing or capital structure; and the
attractiveness of capital projects and acquisitions and the overall
rates of return on alternative investment opportunities.
We define Adjusted EBITDA as net income (loss) attributable to
AMID, plus interest expense, income tax expense, depreciation,
amortization and accretion expense attributable to AMID, debt
issuance costs paid during the period, distributions from
investments in unconsolidated affiliates, transaction expenses,
certain non-cash charges such as non-cash equity compensation
expense, unrealized (gains) losses on derivatives and selected
charges that are unusual, less construction and operating
management agreement income, other post-employment benefits plan
net periodic benefit, earnings in unconsolidated affiliates, gains
(losses) on the sale of assets, net, and selected gains that are
unusual. The GAAP measure most directly comparable to our
performance measure Adjusted EBITDA is net income (loss)
attributable to the AMID.
We are unable to project net income (loss) attributable to AMID
to provide the related reconciliations of pro forma annual Adjusted
EBITDA to the most comparable financial measure calculated in
accordance with GAAP, because the impact of changes in
distributions from unconsolidated affiliates, operating assets and
liabilities, the volume and timing of payments received and
utilized from our customers are out of our control and cannot be
reasonably predicted. Therefore, the reconciliation of Adjusted
EBITDA to projected net income (loss) attributable to AMID is not
available without unreasonable effort.
Investor Contact
American Midstream Partners, LP
Mark Schuck
Director of Investor Relations
(346) 241-3497
ir@americanmidstream.com
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SOURCE American Midstream Partners, LP