PITTSBURGH--(BUSINESS WIRE)--Equitrans Midstream Corporation (NYSE: ETRN) today announced that it has entered into definitive purchase agreements with certain unitholders of EQGP Holdings, LP (NYSE: EQGP) to acquire limited partner interests in EQGP (EQGP Common Units) for $20.00 per unit in cash (Private Purchases), which is a 17.5% premium to the EQGP closing market price as of November 29, 2018. The Private Purchases are expected to close on or about December 31, 2018, after which ETRN and its affiliates will own more than 95% of the outstanding EQGP Common Units.

Upon closing of the Private Purchases, ETRN intends to exercise the Limited Call Right under EQGP’s partnership agreement to acquire all remaining EQGP Common Units not then owned by ETRN and its affiliates. If the Limited Call Right is exercised, the remaining holders of EQGP Common Units will receive at least the same cash price per unit that will be paid in the Private Purchases. The Limited Call Right is expected to close in January 2019 and will be a taxable transaction for EQGP unitholders.

ETRN intends to use the cash proceeds from a newly issued Term Loan B to finance the Private Purchases and the purchases pursuant to the Limited Call Right. ETRN has secured committed financing in support of these purchases.

ETRN also announced that it has made a proposal to EQM Midstream Partners, LP (NYSE: EQM) for the exchange of its incentive distribution rights (IDR) and the economic general partner interest in EQM for 95 million units in EQM and a non-economic general partner interest in EQM, subject to the closing of the Private Purchases and completion of the Limited Call Right (Proposed IDR Transaction). ETRN expects that a portion of the units received will be in the form of Payment-In-Kind Units (PIK Units). The PIK Units would receive distributions in the form of additional PIK Units and would convert on a one-to-one basis into common units representing limited partner interests in EQM at a date to be determined. Final terms of the Proposed IDR Transaction are subject to negotiation with the board of directors of EQM’s general partner or its conflicts committee (EQM Conflicts Committee), and assuming an agreement is reached, ETRN expects that the Proposed IDR Transaction would close in the first quarter of 2019.

Upon completion of the Private Purchases, the Limited Call Right, and the Proposed IDR Transaction, ETRN will have accomplished a full simplification of EQGP and EQM, resulting in a projected 61% ownership of EQM. Additionally, EQM will be the only publicly traded partnership under ETRN and is expected to benefit from the elimination of the IDR burden, as well as stronger coverage and balance sheet metrics.

“Today’s announcement demonstrates our commitment to addressing the IDR overhang in a timely manner and executing transactions that provide significant benefits for all stakeholders,” said Thomas F. Karam, chief executive officer of ETRN, EQGP, and EQM. “Executing on these transactions clears the way for a stable EQM, with 6% to 8% annual distribution growth; and is a strong, strategic starting point for ETRN to grow the annual dividend over the long-term by 8% to 10%.”

EQM Highlights

• The proposed transactions would not result in a distribution cut for EQM unitholders
• Targeting 6% – 8% annual distribution growth beginning in 2019
• 2019 distribution coverage in excess of 1.0x
• Long-term distribution coverage target in excess of 1.2x beginning in 2020
• Long-term debt to EBITDA target of 3.5x – 4.0x beginning in 2020
• PIK Units will provide balance sheet and coverage support
• Improves cost of capital
• No equity issuance is required to fund capital projects for the next several years
• Reduces corporate overhead associated with the elimination of a publicly traded entity

Approvals

ETRN expects that the EQM Conflicts Committee will review the Proposed IDR Transaction. Unitholder voting is not required in connection with the Private Purchases, the exercise of the Limited Call Right, or the Proposed IDR Transaction.

Presentation Materials

An investor presentation regarding the transactions will be made available on the presentations page of the ETRN investor relations website at www.equitransmidstream.com.

Advisors

Guggenheim Securities, LLC and Goldman Sachs & Co. LLC acted as financial advisors to ETRN. Both advisors also provided committed financing in support of the Private Purchases and the exercise of the Limited Call Right. Baker Botts L.L.P. acted as legal counsel to ETRN.

About Equitrans Midstream Corporation

Equitrans Midstream Corporation (ETRN) has a premier asset footprint in the Appalachian Basin and is one of the largest natural gas gatherers in the United States. With a rich 135-year history in the energy industry, ETRN was launched as a standalone company in 2018 and, through its subsidiaries, has an operational focus on gas gathering systems, transmission and storage systems, and water services assets that support natural gas producers across the Basin. ETRN is helping to meet America’s growing need for clean-burning energy and strives to provide a rewarding workplace and enrich the communities where its employees live and work. ETRN owns the general partner interest and a 91.3% limited partner interest in EQGP Holdings, LP (NYSE: EQGP) and a 12.7% limited partner interest in EQM Midstream Partners, LP (NYSE: EQM). EQGP owns the general partner interest, all of the incentive distribution rights, and a 17.9% limited partner interest in EQM.

For more information on Equitrans Midstream Corporation, visit www.equitransmidstream.com

About EQM Midstream Partners

EQM Midstream Partners, LP (EQM) is a growth-oriented limited partnership formed to own, operate, acquire, and develop midstream assets in the Appalachian Basin. As the third largest gatherer of natural gas in the United States, EQM provides midstream services to producers, utilities, and other customers through its strategically located natural gas transmission, storage, and gathering systems, and water services to support energy development and production in the Marcellus and Utica regions. EQM owns approximately 950 miles of FERC-regulated interstate pipelines and approximately 2,130 miles of high- and low-pressure gathering lines.

For more information on EQM Midstream Partners, LP, visit www.eqm-midstreampartners.com

About EQGP Holdings

EQGP Holdings, LP (EQGP) is a limited partnership that owns the general partner interest, all of the incentive distribution rights, and a portion of the limited partner interests in EQM Midstream Partners, LP. Equitrans Midstream Corporation owns the general partner interest and a 91.3% limited partner interest in EQGP.

For more information on EQGP Holdings, LP, visit www.eqm-midstreampartners.com