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
View original content:http://www.prnewswire.com/news-releases/american-midstream-announces-revised-capital-allocation-strategy-and-second-quarter-common-unit-distribution-300687596.html
SOURCE American Midstream Partners, LP
