Business Context and Reporting Period
This Form 8-K was filed by Western Gas Equity Partners, LP (WGP) on December 19, 2018. The filing reports material definitive agreements entered into by WGP and its affiliate, Western Gas Partners, LP (WES), in connection with proposed merger transactions with Anadarko Petroleum Corporation.
Key Financial Metrics and Debt Arrangements
The filing details three primary credit facility amendments and new agreements:
- WGP Revolving Credit Facility (RCF): Maturity extended from March 14, 2019, to the earlier of June 14, 2019, or three business days following the consummation of the merger transactions.
- WES Revolving Credit Facility (RCF): Facility size increased from $1.5 billion to $2.0 billion (subject to transaction consummation). The maturity date was extended to February 15, 2024. As of December 19, 2018, $220.0 million was outstanding, with $4.6 million in letters of credit.
- WES 364-Day Facility: A new $2.0 billion senior unsecured credit agreement established to fund the cash portion of the merger consideration and transaction costs. Interest rates are LIBOR plus 1.000% to 1.625% (or alternate base rate plus 0% to 0.625%). A ticking fee of 0.175% applies 90 days after the effective date until funding.
The filing does not provide revenue, profit, cash flow, or margin data for the reporting period.
Material Changes Versus Prior Period
The primary material changes involve the restructuring of debt facilities to support the pending merger with Anadarko Petroleum Corporation:
- Extension of WGP's credit facility maturity to align with the transaction timeline.
- Expansion of WES's revolving credit capacity by $500 million.
- Creation of a new $2.0 billion bridge facility (364-day) specifically for transaction funding.
Guidance, Outlook, and Risks
Outlook and Management Commentary: The new 364-day facility is conditioned upon the consummation of the merger transactions. Proceeds from future asset sales and debt or equity offerings must be used to repay amounts outstanding under this facility.
Risks and Contingencies: The filing includes a cautionary statement regarding forward-looking statements. Key risks include:
- Failure of unitholders to approve the proposed merger.
- Failure to satisfy closing conditions or obtain regulatory approvals.
- Uncertainties regarding the timing of the transactions.
- Potential adverse reactions to business relationships and competitive responses.
- Unexpected costs or litigation outcomes.
Important Facts for Investors to Verify
- Confirmation of the final terms and closing date of the merger with Anadarko Petroleum Corporation.
- Approval status of the proposed transactions by WGP and WES unitholders.
- Receipt of necessary regulatory approvals for the merger.
- Actual drawdown amounts on the new $2.0 billion 364-day facility once the transaction closes.
- Details regarding the repayment strategy for the 364-day facility, specifically reliance on future asset sales or capital raises.