Business Context and Reporting Period
This Form 8-K, filed on March 4, 2019, by Antero Midstream GP LP ("AMGP"), reports on the preliminary results of the consideration election for the previously announced simplification transaction between AMGP, Antero Midstream Partners LP ("Antero Midstream"), and their affiliates. The filing details the preferences of public unitholders regarding the form of consideration (cash, stock, or mixed) to be received upon the conversion of AMGP into Antero Midstream Corporation ("New AM").
Key Financial Metrics and Transaction Details
The filing does not contain standard operating financial metrics such as revenue, profit, cash flow, or debt levels. Instead, it focuses on the financial mechanics of the transaction consideration:
- Eligible Units: 88,459,812 Antero Midstream common units held by public unitholders (excluding Antero Resources Corporation).
- Consideration Options:
- Public Mixed Consideration: $3.415 cash + 1.6350 shares of New AM stock per unit.
- Public Stock Consideration: 1.6350 shares + additional shares calculated based on the 20-day VWAP of AMGP stock ended March 4, 2019.
- Public Cash Consideration: $3.415 cash + additional cash calculated based on the 20-day VWAP of AMGP stock ended March 4, 2019.
- Antero Resources Consideration: Due to no excess cash being available from public unitholder elections, Antero Resources will receive 1.6023 shares of New AM stock and $3.00 cash per unit (approximately $297 million in aggregate cash).
Material Changes and Election Results
The filing discloses the preliminary breakdown of how public unitholders elected to receive their consideration:
- Public Stock Consideration: Approximately 43.2% of eligible units.
- Public Cash Consideration: Approximately 22.0% of eligible units.
- Public Mixed Consideration (Elected): Approximately 7.9% of eligible units.
- Deemed Mixed Consideration: Approximately 26.9% of eligible units failed to make a valid election and are deemed to have chosen the Public Mixed Consideration.
Impact on Antero Resources: Because the total cash elected by public unitholders did not exceed the amount that would have been paid if all had chosen the Mixed Consideration, there is no excess cash available. Consequently, Antero Resources cannot increase its cash portion and will receive the standard allocation of 1.6023 shares and $3.00 cash per unit.
Outlook, Risks, and Next Steps
Timeline: The final allocation of consideration, including any necessary proration, is expected to occur on or about March 12, 2019.
Risks and Contingencies: The filing notes that the final results are subject to proration if the election results require adjustment under the Simplification Agreement. The document explicitly states it is not an offer to sell or a solicitation to buy securities.
Management Commentary: Management directs investors to the definitive joint proxy statement/prospectus filed on Form S-4 (effective January 30, 2019) for comprehensive details regarding the transaction.
Key Facts for Investor Verification
- Verify the final allocation of consideration and any proration adjustments expected around March 12, 2019.
- Confirm the exact 20-day volume-weighted average price (VWAP) of AMGP stock ended March 4, 2019, to calculate the precise value of the "Public Stock" and "Public Cash" options.
- Review the definitive joint proxy statement/prospectus (Form S-4) for full terms of the simplification transaction.
- Note that Antero Resources will receive approximately $297 million in aggregate cash consideration based on the preliminary election results.