American Midstream Partners LP (NYSE:AMID) (‘American Midstream') signed an agreement to acquire a 35.09% stake in Southcross Energy Partners LP (NYSE:SXE) from Southcross Holdings LP on October 31, 2017. In the transaction, American Midstream will acquire equity interests in certain subsidiaries of Southcross Holdings LP that directly or indirectly own 100% of the limited liability company interests of the general partner of Southcross Energy Partners (‘SXE') and approximately 55% of the SXE common units by issuing 3.4 million American Midstream common units, 4.5 million new Series E convertible preferred units, options to acquire 4.5 million American Midstream common units and the repayment of $139 million of estimated net debt. The preferred units will be issued at a price of $15 per unit and may be paid-in-kind at the American Midstream common unit distribution rate at the option of American Midstream for two years. American Midstream will have the right to convert the preferred units to American Midstream common units if the 20-day volume weighted average price of American Midstream common stock exceeds $22.5. The options are American-style call options with an $18.5 strike price that expire in 2022. Concurrently, American Midstream will acquire a 27.54% stake in SXE from public shareholders in a unit-for-unit deal wherein SXE unitholders will receive 0.16 units of American Midstream for each SXE unit held. Mike O'Leary, Tom Ford, Angela Richards, Allison Mantor, Matt Grunert, Freddy Feldman, Garrett Hughey and Jared Grodin of Andrews Kurth Kenyon acted as legal advisors for American Midstream Partners.


American Midstream will thereby acquire 100% of the outstanding common units of SXE which will be merged into American Midstream pursuant to the deal. American Midstream has also agreed to acquire certain assets of Southcross Holdings in connection with the deal. As part of the transaction, American Midstream's sponsor, an affiliate of ArcLight Capital Partners LLC, agreed to transfer ownership of 15% of American Midstream's general partner and incentive distribution rights to Southcross Holdings. In case of termination SXE will pay American Midstream a fee of $2 million.

The terms of the proposed merger with SXE will be subject to approval by a majority of the outstanding non-affiliated public common unitholders of SXE. The transactions with Southcross Holdings and SXE will be subject to customary regulatory approvals. The acquisition of SXE is conditioned on the Southcross Holdings transaction, and until both transactions have closed American Midstream, Southcross Holdings and SXE will continue to operate as separate companies. The special meeting of Southcross shareholder to approve the transaction will be held on March 12, 2018. As of February 9, 2018, the conflicts committee of SXE approved the transaction and the special meeting of SXE unitholders will now be held on March 27, 2018. The transaction is expected to close in the second quarter of 2018. American Midstream expects the transaction to be single-digit accretive to DCF/unit in 2018 and 2019, approaching double-digit accretion in 2020. As on March 27, 2018, the shareholders of Southcross Energy Partners approved the transaction.

Deutsche Bank and Bank of America Merrill Lynch served as financial advisers to American Midstream on the deal. Tull R. Florey and Hillary H. Holmes of Gibson Dunn & Crutcher, LLP acted as legal advisor to American Midstream. RBC Capital Markets and Wells Fargo Securities acted as financial advisers, while William Swanstrom and Michelle A. Earley of Locke Lord LLP as legal counsel to SXE. Tudor, Pickering, Holt & Co acted as financial adviser, and Jones Day acted as legal adviser to the special committee of Southcross Holdings. SXE's conflicts committee's financial adviser was Jefferies LLC, and Akin Gump Strauss Hauer & Feld LLP was its legal adviser. Georgeson Inc. acted as proxy solicitor to SXE and will be paid a fee of $0.015 million. Wells Fargo Shareowner Services acted as transfer agent to American Midstream.

American Midstream Partners LP (NYSE:AMID) cancelled the acquisition 35.09% stake in Southcross Energy Partners LP (NYSE:SXE) from Southcross Holdings LP on July 29, 2018.