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ArcLight affiliate makes 2nd takeover bid for American Midstream

An affiliate of ArcLight Energy Partners Fund V put in a new bid to buy the debt-laden midstream energy partnership American Midstream Partners LP.

Under the revised nonbinding proposal, ArcLight would buy all of the American Midstream common units that ArcLight and its partners do not already own for $4.50 per unit, according to news release issued after the stock market closed Jan. 3.

Private equity heavyweight ArcLight Capital Partners LLC in late September 2018 made an unsolicited offer to acquire American Midstream for $6.10 per common unit. ArcLight is the largest institutional holder of American Midstream, with a 24.96% stake in the partnership, and it owns 77.80% of American Midstream's general partner.

While lower than the initial offer, the $4.50-per-unit bid still represents a substantial premium for American Midstream, whose units closed at $3.15 on Jan. 3. The units were up to $3.70 at about 5 p.m. ET, representing a 17.5% rise during after-market trading.

American Midstream announced in late December 2018 that it would not distribute cash to investors for the fourth quarter of 2018 after amending a credit agreement to cut back debt. American Midstream said at the time that the agreement stipulated that the pipeline partnership would not pay any cash distributions unless its leverage ratio is less than 5x, though it did not disclose its current leverage ratio.

Apart from the unit price change in ArcLight's most recent offer, the terms of proposed buyout are the same as they were in September 2018, the American Midstream news release said.

The proposed deal would be subject to an array of contingencies, including getting approval from American Midstream GP LLC's board of directors conflicts committee and from unit holders with a majority of the partnership's outstanding common units.