Azure Midstream Energy, LLC, announced the successful completion of its acquisition of (i) 100% of Marlin Midstream GP, LLC, Marlin Midstream Partners, LP's general partner, (ii) 90% of Marlin Midstream GP, LLC's incentive distribution rights in Marlin, and (iii) an option to acquire 20% of NuDevco Midstream Development, LLC's 10.7 million limited partnership units in Marlin. In a separate transaction, Azure contributed its Legacy gathering system to Marlin for US$162.5 million in cash.
At closing, US$95 million of proceeds from the Legacy contribution was used to reduce indebtedness on Azure's term loan. Pro forma for the transaction, Azure has US$428 million outstanding and is nearly half way to achieving a US$200 million debt reduction target in 2015.
The transformative transaction provides a pathway for additional dropdowns and financial flexibility to execute on Azure's growth plan, and improves Azure's access to more attractive capital. Additionally, Azure is financially incentivised to support the Partnership's growth through accretive dropdowns and cash flow from its future limited partner unit ownership, as well as its substantial ownership in Marlin's incentive distribution rights.
"This significant transaction allows Azure to complete our goal of becoming part of a growing, public MLP capable of providing access to growth capital for acquisitions. Additionally, the combination provides our customers with enhanced midstream service offerings and presents our stake holders with an enterprise that has increased scale, diversity and growth," said I.J. "Chip" Berthelot, II, Chief Executive Officer and President of Azure.
Adapted from press release by Hannah Priestley-Eaton