Summit Unitholders Approve Conversion to a C-Corporation

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Jul 18, 2024, 18:24 ET

Summit Schedules Second Quarter 2024 Earnings Call and Announces 2023 K-3 Tax Form Availability

HOUSTON, July 18, 2024 /PRNewswire/ -- Summit Midstream Partners, LP (NYSE: SMLP) ("Summit," "SMLP" or the "Partnership") announced today that, at its Special Meeting of Unitholders ("Special Meeting") held today, unitholders voted to approve the conversion from a master limited partnership ("MLP") to a C-corporation (the "Corporate Reorganization").

Heath Deneke, President, Chief Executive Officer, and Chairman of the Board, commented, "I would like to thank all of our unitholders for their strong support for Summit's conversion to a C-corporation. This transaction will deliver significant benefits by reducing unitholders' tax burden going forward, simplifying Summit's structure to make its equity easier to own, enhancing trading liquidity and providing greater transparency and easier decision-making for investors. In addition to the conversion, the notes offering we announced yesterday and expected upsizing of our ABL credit facility from $400 million to $500 million increases Summit's financial flexibility to execute our strategy relative to our existing capital structure. Through the C-corporation conversion, expected refinancing, active portfolio management and steps to strengthen Summit's financial profile, we have positioned Summit for continued growth and success. We look forward to completing this set of transactions and driving value creation for our investors."

Summit unitholders voted to approve the Corporate Reorganization with more than 88% of votes cast in favor of the Corporate Reorganization proposal. Unitholders also voted to approve all other proposals presented at the Special Meeting. Summit will file the final results of the Special Meeting with the Securities and Exchange Commission on a Form 8-K, after certification of the voting results by the independent Inspector of Elections for the Special Meeting. The anticipated effective date of the transaction is August 1, 2024, subject to customary closing conditions.

Notes Offering

On July 17, Summit announced that Summit Midstream Holdings, LLC, which is a subsidiary of the Partnership, priced an upsized offering of $575 million in aggregate principal amount of new 8.625% Senior Secured Second Lien Notes due 2029 (the "New Notes"). It is expected that the New Notes will be guaranteed on a senior second-priority basis by Summit and certain existing and future subsidiaries and will initially be secured on a second-priority basis by substantially the same collateral that is pledged for the benefit of the Partnership's lenders under its ABL facility.

The New Notes, and expected upsizing of the ABL credit facility, provides Summit with meaningfully improved financial flexibility. Relative to Summit's existing second lien notes, the New Notes will carry no free cash flow sweep mechanism. Subject to certain leverage-based thresholds, the New Notes provide additional flexibility to raise debt, address the capital structure associated with Double E and pay preferred and common distributions. Summit believes this additional flexibility enables us to execute on our strategy with financial discipline and a supportive groups of investors and lenders.

Second Quarter 2024 Earnings Call

Summit will host a conference call at 10:00 a.m. Eastern on August 9, 2024 to discuss its second quarter 2024 operating and financial results. The call can be accessed via teleconference at: Q2 2024 Summit Midstream Partners LP Earnings Conference Call (https://register.vevent.com/register/BI5642f88da4d246f9af0ef347fdc495ea). Once registration is completed, participants will receive a dial-in number along with a personalized PIN to access the call. While not required, it is recommended that participants join 10 minutes prior to the event start. The conference call, live webcast and archive of the call can be accessed through the Investors section of Summit's website at www.summitmidstream.com.

2023 K-3 Tax Form Availability

SMLP also announces that its 2023 Schedule K-3 tax forms are available online. Unitholders requiring this information may access their Schedule K-3 at https://partnerdatalink.com/Summit. SMLP will also mail a 2023 Schedule K-3 to any unitholder making a request for a physical copy of the Schedule K-3. For additional information or assistance, unitholders may also contact Partner DataLink via email at [email protected] or via phone at (855) 375-4158 Monday through Friday from 8:00 a.m. – 5:00 p.m. CST or visit SMLP's website at www.summitmidstream.com under "Investors >> K-1 Tax Information."

A limited number of unitholders (primarily foreign unitholders, unitholders computing a foreign tax credit on their tax return and certain corporate and/or partnership unitholders) may need the detailed information disclosed on Schedule K-3 for their specific reporting requirements. To the extent Schedule K-3 is applicable to your federal income tax return filing needs, we encourage you to review the information contained on this form and refer to the appropriate federal laws and guidance or consult with your tax advisor.

Kirkland & Ellis LLP served as legal advisor for the Corporate Reorganization and notes offering and TD Securities (USA) LLC served as strategic advisor to Summit for the Corporate Reorganization.

About Summit Midstream Partners, LP

SMLP is a value-driven limited partnership focused on developing, owning and operating midstream energy infrastructure assets that are strategically located in the core producing areas of unconventional resource basins, primarily shale formations, in the continental United States. SMLP provides natural gas, crude oil and produced water gathering, processing and transportation services pursuant to primarily long-term, fee-based agreements with customers and counterparties in four unconventional resource basins: (i) the Williston Basin, which includes the Bakken and Three Forks shale formations in North Dakota; (ii) the Denver-Julesburg Basin, which includes the Niobrara and Codell shale formations in Colorado and Wyoming; (iii) the Fort Worth Basin, which includes the Barnett Shale formation in Texas; and (iv) the Piceance Basin, which includes the Mesaverde formation as well as the Mancos and Niobrara shale formations in Colorado. SMLP has an equity method investment in Double E Pipeline, LLC, which provides interstate natural gas transportation service from multiple receipt points in the Delaware Basin to various delivery points in and around the Waha Hub in Texas. SMLP is headquartered in Houston, Texas.

Forward-Looking Statements

This communication contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond the control of the Partnership and Summit Midstream Corporation (the "New Summit"), which may include statements about:

the occurrence of any event, change or other circumstances that could give rise to the termination of the Agreement and Plan of Merger (the "Merger Agreement");
the risk that the failure to consummate the Corporate Reorganization will disrupt ongoing or future strategic alternatives, including a Potential Transaction (as defined in the proxy statement/prospectus (the "Proxy Statement/Prospectus") filed with the U.S. Securities and Exchange Commission (the "SEC"));
the outcome of any legal proceedings that may be instituted against the Partnership or New Summit and others relating to the Merger Agreement;
the effect of the announcement of the Corporate Reorganization on the Partnership's customer relationships, operating results and business generally;
the risks that the proposed Corporate Reorganization disrupts current plans and operations;
the amount of the costs, fees, expenses and charges related to the Corporate Reorganization;
the failure to satisfy the conditions to the consummation of the Corporate Reorganization;
the failure to realize a lower long-term cost of capital and other anticipated benefits of the proposed Corporate Reorganization;
the closing of the notes offering;
the Partnership and New Summit's ability to access the debt and equity markets, which will depend on general market conditions and the credit ratings for debt obligations;
fluctuations in natural gas, natural gas liquids ("NGLs") and crude oil prices, including as a result of political or economic measures taken by various countries or the Organization of the Petroleum Exporting Countries;
the extent and success of the Partnership's and New Summit's customers' drilling and completion efforts, as well as the quantity of natural gas, crude oil, freshwater deliveries, and produced water volumes produced within proximity of the Partnership's and New Summit's assets;
failure or delays by the Partnership's and New Summit's customers in achieving expected production in their natural gas, crude oil and produced water projects;
competitive conditions in the Partnership's and New Summit's industry and their impact on the Partnership's and New Summit's ability to connect hydrocarbon supplies to the Partnership's and New Summit's gathering and processing assets or systems;
actions or inactions taken or nonperformance by third parties, including suppliers, contractors, operators, processors, transporters and customers, including the inability or failure of the Partnership's and New Summit's shipper customers to meet their financial obligations under the Partnership's and New Summit's gathering agreements and the Partnership's and New Summit's ability to enforce the terms and conditions of certain of the Partnership's and New Summit's gathering agreements in the event of a bankruptcy of one or more of the Partnership's and New Summit's customers;
the Partnership's and New Summit's ability to divest of certain of the Partnership's and New Summit's assets to third parties on attractive terms, which is subject to a number of factors, including prevailing conditions and outlook in the natural gas, NGL and crude oil industries and markets;
the ability to attract and retain key management personnel;
commercial bank and capital market conditions and the potential impact of changes or disruptions in the credit and/or capital markets;
changes in the availability and cost of capital and the results of the Partnership's and New Summit's financing efforts, including availability of funds in the credit and/or capital markets;
restrictions placed on the Partnership and New Summit by the agreements governing the Partnership's and New Summit's debt and preferred equity instruments;
the availability, terms and cost of downstream transportation and processing services;
natural disasters, accidents, weather-related delays, casualty losses and other matters beyond the Partnership's and New Summit's control;
the current and potential future impact of the COVID-19 pandemic or other pandemics on the Partnership's and New Summit's business, results of operations, financial position or cash flows;
operational risks and hazards inherent in the gathering, compression, treating and/or processing of natural gas, crude oil and produced water;
the Partnership's and New Summit's ability to comply with the terms of the agreements comprising the Global Settlement (as defined in the Proxy Statement/Prospectus);
weather conditions and terrain in certain areas in which the Partnership and New Summit operate;
physical and financial risks associated with climate change;
any other issues that can result in deficiencies in the design, installation or operation of the Partnership's and New Summit's gathering, compression, treating, processing and freshwater facilities;
timely receipt of necessary government approvals and permits, the Partnership's and New Summit's ability to control the costs of construction, including costs of materials, labor and rights-of-way and other factors that may impact the Partnership's and New Summit's ability to complete projects within budget and on schedule;
the Partnership's and New Summit's ability to finance the Partnership's and New Summit's obligations related to capital expenditures, including through opportunistic asset divestitures or joint ventures and the impact any such divestitures or joint ventures could have on the Partnership's and New Summit's results;
the effects of existing and future laws and governmental regulations, including environmental, safety and climate change requirements and federal, state and local restrictions or requirements applicable to oil and/or gas drilling, production or transportation;
the effects of litigation;
interest rates;
changes in general economic conditions; and
other factors and uncertainties discussed in Proxy Statement/Prospectus and the Partnership's filings with the SEC, including the Partnership's Annual Report on Form 10-K for the year ended December 31, 2023 and the Partnership's Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.

All of these types of statements, other than statements of historical fact included in this communication, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "could," "should," "expect," "plan," "project," "intend," "anticipate," "believe," "estimate," "predict," "potential," "pursue," "target," "continue," the negative of such terms or other comparable terminology.

The forward-looking statements contained in the Proxy Statement/Prospectus are largely based on the Partnership's expectations, which reflect estimates and assumptions made by the Partnership's management. These estimates and assumptions reflect the Partnership's best judgment based on currently known market conditions and other factors. Although the Partnership believes such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond the Partnership's control. In addition, management's assumptions about future events may prove to be inaccurate. All readers are cautioned that the forward-looking statements contained in the Proxy Statement/Prospectus are not guarantees of future performance, and the Partnership's expectations may not be realized or the forward-looking events and circumstances may not occur. Actual results may differ materially from those anticipated or implied in the forward-looking statements due to factors described in the section of the Proxy Statement/Prospectus entitled "Risk Factors." The forward-looking statements in the Proxy Statement/Prospectus speak only as of the date of this document; we disclaim any obligation to update such statements unless required by securities law, and we caution you not to unduly rely on them.

Additional Information and Where to Find It

This communication relates to the proposed Corporate Reorganization of the Partnership. This communication may be deemed to be solicitation material in respect of the proposed Corporate Reorganization. The proposed Corporate Reorganization has been submitted to the Partnership's common unitholders for their consideration. In connection with the proposed Corporate Reorganization, New Summit has filed with the SEC a Form S-4 containing the Proxy Statement/Prospectus to be distributed to the Partnership's common unitholders in connection with the Partnership's solicitation of proxies for the vote of the Partnership's common unitholders in connection with the proposed Corporate Reorganization and other matters as described in such Proxy Statement/Prospectus. The Proxy Statement/Prospectus also serves as the prospectus relating to the offer of the securities to be issued to the Partnership's common unitholders in connection with the completion of the proposed Corporate Reorganization. The Partnership and New Summit may file other relevant documents with the SEC regarding the proposed Corporate Reorganization. The definitive Proxy Statement/Prospectus has been mailed to the Partnership's common unitholders. BEFORE MAKING ANY INVESTMENT DECISION WITH RESPECT TO THE PROPOSED CORPORATE REORGANIZATION, INVESTORS AND COMMON UNITHOLDERS AND OTHER INTERESTED PERSONS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED CORPORATE REORGANIZATION (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND OTHER RELEVANT MATERIALS CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED CORPORATE REORGANIZATION.

The Proxy Statement/Prospectus, any amendments or supplements thereto and other relevant materials, and any other documents filed by the Partnership or New Summit with the SEC, may be obtained as such documents are filed with the SEC free of charge at the SEC's website at www.sec.gov or by directing a written request to the Partnership at 910 Louisiana Street, Suite 4200, Houston, Texas 77002.

No Offer or Solicitation

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

SOURCE Summit Midstream Partners, LP