Hess Midstream Partners LP will acquire the ownership interests of Hess Corp. and Global Infrastructure Partners in Hess Infrastructure Partners LP for $6.2 billion. The transaction is expected to close in the fourth quarter, subject to closing conditions and regulatory approvals.
The deal includes the 80% stake of Hess Infrastructure Partners in Hess Midstream Partners' oil and gas midstream assets, Hess Infrastructure Partners' water service business and outstanding economic general partner interest and incentive distribution rights in Hess Midstream Partners, according to an Oct. 4 news release from Hess Midstream Partners LP. The transaction is expected to create a large-scale midstream company with an enterprise value of more than $7.25 billion, according to the release.
Hess Midstream Partners will also assume around $1.15 billion of existing Hess Infrastructure Partners' debt, issue about 230 million Hess Midstream Partners units and pay Hess Corp. and Global Infrastructure Partners a cash total of around $550 million. In a separate Oct. 4 news release, Hess Corp. announced it will receive around $275 million in cash and about 115 million new units in Hess Midstream Partners LP for the transaction.
Around $350 million in existing borrowings under Hess Infrastructure Partners' credit facilities will also be retired and Hess Midstream Partners LP will assume about $800 million of outstanding Hess Infrastructure Partners notes in a par-for-par exchange. When the transaction closes, Hess Midstream Partners expects a total debt of $1.76 billion as it plans additional borrowings of around $960 million.
Hess Midstream Partners' organizational structure will be converted into a so-called Up-C structure, eliminating incentive distribution rights to sponsors, and the partnership's public unithodlers will get securities in a new public entity to be called Hess Midstream LP, consisting 6% of the new entity on an as-exchanged basis.
Hess and Global Infrastructure Partners will each hold 47% of Hess Midstream LP following the conversion of their limited partner interests in Hess Midstream Partners LP.
For next year, Hess Midstream targets a net income of $440 million to $480 million, an adjusted EBITDA of $710 million to $750 million and capital expenditures of around $350 million. Hess Midstream also plans to maintain Hess Midstream Partners LP's targeted 15% distribution per unit growth through at least 2021. Hess Corporation also said it will maintain the same commercial contracts with Hess Midstream under the current structure.
Morgan Stanley served as financial adviser to Hess Corp. For Hess Infrastructure Partners and its partners, Goldman Sachs & Co. LLC and J.P. Morgan acted as financial advisers, while Latham & Watkins LLP served as legal adviser.
