Business Context and Reporting Period
Company: Kayne Anderson Acquisition Corp. (Note: Request metadata listed "Kinetik Holdings Inc.", but the filing text identifies the registrant as Kayne Anderson Acquisition Corp.)
Filing Type: Form 8-K (Current Report)
Date: August 8, 2018
Event: Entry into a Material Definitive Agreement (Contribution Agreement) to acquire 100% of the equity interests in the "Alpine High Entities" (midstream assets) from Apache Midstream LLC and options to acquire equity in future pipelines.
Key Financial Metrics and Transaction Structure
Transaction Consideration to Apache Contributor:
- Equity: 250,000,000 Common Units in Altus Midstream LP; 1,862,606 newly issued Class A Common Stock shares; and "Assigned Shares" (variable based on redemptions, capped at 5,450,422).
- Warrants: 3,182,140 warrants exercisable for Class A Common Stock.
- Class C Stock: Non-economic capital stock issued corresponding to Common Units received.
- Cash Consideration: Applicable only if closing occurs after September 30, 2018, equal to capital expenditures incurred by Alpine High Entities from October 1, 2018, through closing.
- Earn-Out Potential: Up to 37,500,000 shares of Class A Common Stock based on gas volume in Pecos County (2021) and stock price milestones ($14.00 and $16.00) within five years.
Private Placements (Subscription Agreements):
- Shares Issued: 57,234,023 shares of Class A Common Stock.
- Aggregate Consideration: Approximately $572.3 million.
- Placement Fee: Approximately $3.8 million.
Liquidity and Closing Conditions:
- Minimum Available Funds: The closing is conditioned on the Company having a minimum of $475,000,000 in "Available Funds" at the time of Closing.
- Fee Cap: Closing is conditioned on total fees not exceeding $30,000,000.
Revenue, Profit, and Cash Flow: The filing text does not provide specific revenue, profit, or cash flow figures for the Company or the target entities. It is a transaction announcement rather than a financial results report.
Material Changes and Agreements
- Acquisition of Assets: The Company will acquire Alpine High Gathering, Pipeline, Processing, and NGL Pipeline entities, plus options for Gulf Coast Express, EPIC Crude, Salt Creek NGL, and Shin Oak pipelines.
- Sponsor Forfeiture: The Company's sponsor (Kayne Anderson Sponsor, LLC) will forfeit 1,862,606 shares of Class B Common Stock, a variable number of Class B shares, and 3,182,140 warrants to the Company at closing.
- Redemption Rights: Apache Contributor may redeem Common Units for Class A Common Stock or cash beginning 180 days after Closing, subject to holding requirements.
- Forfeiture Risk: Up to 40,000,000 Common Units (and associated Class C stock) are subject to forfeiture if Apache fails to preserve the Company's ability to exercise the pipeline options.
Guidance, Outlook, and Risks
Outlook and Timeline:
- Outside Date: The transaction must close on or before December 31, 2018, or the agreement may be terminated.
- Future Operations: Apache will provide construction, operations, and maintenance services via a COMA agreement.
Risks and Contingencies:
- Termination Rights: Either party may terminate if the closing does not occur by December 31, 2018, if laws prohibit the transaction, or if material warranties are breached.
- Registration Default: If the Company fails to register the resale of Private Placement shares within specified timelines, it must pay liquidated damages of 0.50% of the purchase price per month, capped at 5.0%.
- Forward-Looking Statements: The filing warns that actual results may differ due to risks including failure to obtain stockholder approval, regulatory changes, and market competition.
Investor Verification Checklist
- Verify the final number of public shares redeemed for cash, as this directly impacts the number of "Assigned Shares" issued to Apache.
- Confirm the total "Available Funds" at closing to ensure the $475,000,000 minimum threshold is met.
- Review the definitive proxy statement for details on the stockholder vote required to approve the business combination.
- Monitor the status of the registration statement for the Private Placement shares to assess potential liquidated damages exposure.
- Check for any updates regarding the exercise of pipeline options (Gulf Coast Express, EPIC Crude, etc.) and the associated forfeiture risks.