Business Context and Reporting Period
This Form 8-K filing by Altus Midstream Company (ALTM) reports on events occurring on June 12, 2019. The filing details the closing of a private offering of Series A Cumulative Redeemable Preferred Units by Altus Midstream LP (the Partnership), which is indirectly controlled by the Corporation. The transaction was executed under a Preferred Unit Purchase Agreement entered into on May 8, 2019.
Key Financial Metrics
- Transaction Size: $625 million aggregate issue price for Series A Preferred Units.
- Cash Proceeds: Approximately $621.3 million received by the Partnership after deducting discounts to certain purchasers.
- Debt and Liquidity: The filing does not provide specific data on total debt, liquidity ratios, or operating cash flows; it focuses solely on the capital raise.
- Revenue and Profit: No revenue, profit, or margin data is included in this current report.
Material Changes and Agreements
The primary material change is the issuance of Preferred Units and the execution of three key agreements:
- Partnership Agreement: A Second Amended and Restated Agreement of Limited Partnership was adopted, defining distribution rates, redemption rights, and exchange rights for the Preferred Units into Class A Common Stock.
- Registration Rights Agreement: Provides holders of Preferred Units with registration rights for shares of Class A Common Stock received upon exchange.
- Voting Agreement: Apache Corporation, the controlling entity, agreed to vote its beneficially owned shares in favor of the required stockholder approval for the potential issuance of shares resulting from the Preferred Unit exchange.
Guidance, Outlook, and Risks
The filing contains no specific financial guidance or operational outlook for future periods. However, it highlights the following contingencies and risks:
- Stockholder Approval Requirement: Because the Preferred Units could be exchanged for 20% or more of the Corporation's outstanding voting power, the Corporation must obtain stockholder approval at its 2020 annual meeting. Until then, the Preferred Units are capped at exchanging for no more than 19.5% of outstanding voting power.
- Forward-Looking Statements: The filing includes standard disclaimers that actual results may differ materially from expectations due to various risks and uncertainties, referencing the Risk Factors in the 2018 Form 10-K.
Investor Verification Checklist
- Verify the specific distribution rate and redemption terms of the Series A Preferred Units in the Second Amended and Restated Agreement of Limited Partnership (Exhibit 10.1).
- Confirm the timeline and agenda for the 2020 annual stockholder meeting regarding the approval of the potential share issuance.
- Review the Voting Agreement (Exhibit 10.2) to understand Apache Corporation's specific voting commitments and restrictions.
- Check the Registration Rights Agreement (Exhibit 4.1) for details on the shelf registration capabilities for the underlying common stock.