Tulsa-based NGL Energy Partners LP announced that on September 25, 2019, it entered into an agreement with institutional investors for the private placement of $200 million of NGL’s Class D Preferred Units and warrants to purchase common units representing equity interests in NGL.
The Class D Preferred Units are additional preferred units of the same class as the $400 million of Class D Preferred Units previously issued on July 2, 2019 in connection with financing NGL’s acquisition of assets from Mesquite Disposals Unlimited, LLC and Mesquite SWD Inc. All of the Class D Preferred Units bear an initial preferred distribution rate of 9.00%, are redeemable at any time at NGL’s option, and are redeemable at the option of the holders after eight and one-half years from the July 2, 2019 initial issuance date, or in connection with a change of control. The warrants to be issued in this transaction have a ten-year expiration date and will be exercisable upon and after the first anniversary of their issuance, for 3,500,000 common units at an exercise price equal to $13.56 per unit, and 5,000,000 common units at an exercise price equal to $16.28 per unit.
NGL plans to use the net proceeds from the issuance of these additional Class D Preferred Units and warrants to fund a portion of the purchase price for its acquisition of Hillstone Environmental Partners, LLC.
The closing of the sale of the Class D Preferred Units and the warrants is contingent upon (and is expected to occur in connection with) the consummation of the Hillstone acquisition, which is expected to occur in 2019, and is subject to customary closing conditions.