Business Context and Reporting Period
This Form 8-K Current Report, dated April 16, 2014, is filed by CenterPoint Energy, Inc. and CenterPoint Energy Resources Corp. (CERC). The report details the closing of the initial public offering (IPO) of Enable Midstream Partners, LP (the "Partnership") and the execution of related definitive agreements.
Key Financial Metrics and Ownership Structure
The filing does not provide standard financial performance metrics such as revenue, profit, cash flow, or debt levels for the reporting period. Instead, it discloses the post-IPO ownership structure and capitalization of the Partnership:
- Ownership Interests: CERC holds approximately 54.7% of the limited partner interests. OGE Energy Corp. affiliates hold approximately 26.7%, and ArcLight Capital Partners affiliates hold approximately 11.5%.
- Unit Conversions: Following the closing, 139,704,916 of CERC's common units and 68,150,514 of OGE's common units were converted into subordinated units.
- Distribution Policy: 100% of Available Cash will be distributed to limited partners quarterly. The General Partner holds incentive distribution rights entitling it to an increasing percentage of distributions after specified thresholds are met.
Material Changes and Agreements
The primary material change is the entry into the Second Amended and Restated Agreement of Limited Partnership of Enable Midstream Partners, LP. Key provisions include:
- Deletion of provisions that no longer apply post-Offering.
- Establishment of governance rules, including the ability for limited partners to remove the General Partner via a 75% vote.
- Provisions governing capital accounts, tax treatment, and partner withdrawals.
Additionally, the General Partner (Enable GP, LLC) amended its Limited Liability Company Agreement to require unanimous votes for specific matters, including the election or removal of the CEO/CFO, disposal of certain assets, and participation in new lines of business.
Management Commentary and Governance
The filing outlines the composition of the General Partner's Board of Directors following the Offering:
- Scott M. Prochazka (President and CEO of CenterPoint Energy, Inc.)
- Gary L. Whitlock (EVP and CFO of CenterPoint Energy, Inc.)
- Peter B. Delaney (Chairman, President and CEO of OGE)
- Sean Trauschke (VP and CFO of OGE)
- Lynn L. Bourdon, III (President and CEO of the General Partner)
- Peter H. Kind
The filing notes that the description of the agreements is qualified by reference to the full text of the Partnership Agreement and Amendment filed as Exhibits 10.1 and 10.2.
Investor Verification Checklist
- Verify the full text of the Second Amended and Restated Agreement of Limited Partnership (Exhibit 10.1) for specific definitions of "Available Cash" and distribution mechanics.
- Review the First Amendment to the General Partner's LLC Agreement (Exhibit 10.2) to understand the scope of assets requiring unanimous vote for disposal.
- Confirm the exact number of subordinated units held by CERC and OGE and the specific terms governing their conversion back to common units.
- Examine the prospectus dated April 10, 2014, for a complete description of the Partnership Agreement referenced in this filing.