Hess Midstream LP — Form 8-K Summary
Business context and reporting period
Hess Midstream LP filed a Current Report on November 16, 2023, regarding a material unit repurchase agreement entered into on November 13, 2023. The transaction involves HESM OpCo, the subsidiary holding the Company’s operating assets, and the Company’s sponsors, Hess Investments North Dakota LLC and GIP II Blue Holding, L.P.
Transaction and key financial metrics
- HESM OpCo agreed to repurchase 3,370,407 Class B units: 1,274,594 from HINDL and 2,095,813 from GIP.
- The aggregate purchase price was approximately $100 million, or $29.67 per Class B unit.
- The $29.67 price equaled the November 13, 2023 closing price of the Company’s Class A shares.
- The transaction closed on November 16, 2023.
- HESM OpCo funded the repurchase with borrowings under its existing revolving credit facility.
- Immediately after closing, HESM OpCo cancelled the repurchased Class B units, and the Company cancelled an equal number of Class B shares for no consideration.
- The filing does not provide updated revenue, profit, cash flow, margin, debt-balance, liquidity, or leverage metrics.
Material changes versus the prior comparable period
The filing is transaction-focused and does not present comparative operating or financial results. The principal change is the reduction in outstanding Class B units and corresponding Class B shares, funded with additional borrowings under the revolving credit facility.
Guidance, outlook, risks, contingencies, and unusual items
- No new earnings guidance or operating outlook is provided.
- The transaction increases borrowings under the revolving credit facility; the filing does not state the resulting outstanding balance, interest rate, maturity, or covenant headroom.
- The transaction was unanimously approved by the GP LLC board and its independent Conflicts Committee, which retained independent legal and financial advisors.
- The sponsors and Partnership Entities made customary representations and warranties concerning authorization, ownership, organization, and required approvals.
- After the transaction, HINDL and GIP collectively retained approximately 70.2% of the voting interest and approximately 1.3% of the Company’s economic interest, while holding approximately 70.2% of the economic interest in HESM OpCo.
- The filing identifies ongoing overlapping relationships among officers and directors of Hess Corporation, the sponsors, HIP GP, the General Partner, and related entities.
Investor verification checklist
- Verify the final borrowing amount, post-transaction debt balance, interest expense, and revolving-credit-facility capacity and covenants.
- Confirm the number of Class B units and Class B shares cancelled and the resulting ownership and voting percentages.
- Review the complete Unit Repurchase Agreement filed as Exhibit 10.1 for closing conditions, representations, warranties, and other obligations.
- Review the Exhibit 99.1 news release for management’s stated rationale and any additional transaction commentary.
- Assess the effect of the repurchase and increased debt on per-share economics, distributions, liquidity, and leverage using subsequent periodic filings.