| Item 1.01. | Entry into a Material Definitive Agreement. |
Unit Repurchase Agreement
On July 27, 2021, Hess Midstream LP, a Delaware limited partnership (the “Company”), Hess Midstream Operations LP, a Delaware limited partnership and a subsidiary of the Company that holds all of the Company’s operating assets (“HESM OpCo” and, together with the Company, the “Partnership Entities”), Hess Investments North Dakota LLC, a Delaware limited liability company (“HINDL”), and GIP II Blue Holding Partnership, L.P., a Delaware limited partnership (“GIP” and, together with HINDL, the “Sponsors” and each, a “Sponsor”), entered into a Unit Repurchase Agreement (the “Repurchase Agreement”) pursuant to which HESM OpCo has agreed to purchase from each Sponsor 15,625,000 Class B units representing limited partner interests in HESM OpCo (the “Class B Units” and such Class B Units subject to the Repurchase Agreement, the “Subject Units”) for an aggregate purchase price of $750 million (the “Repurchase Transaction”). The purchase price per Class B Unit is $24.00, representing an approximate 4% discount to the 30-day volume weighted average trading price of Class A shares representing limited partner interests in the Company (the “Class A Shares”) through July 27, 2021. Pursuant to the terms of the Repurchase Agreement, immediately following the purchase of the Subject Units from the Sponsors, HESM OpCo will cancel the Subject Units, and the Company will cancel, for no consideration, an equal number of Class B shares representing limited partner interests in the Company (the “Class B Shares”) held by Hess Midstream GP LP, a Delaware limited partnership and the general partner of the Company (the “General Partner”), in accordance with Section 5.5(e) of the Amended and Restated Agreement of Limited Partnership of the Company, dated as of December 16, 2019.
The terms of the Repurchase Agreement were unanimously approved by the Board of Directors (the “Board”) of Hess Midstream GP LLC (“GP LLC”), the general partner of the General Partner, and the Conflicts Committee of the Board comprising solely of independent directors. The Conflicts Committee retained independent legal and financial advisors to assist it in evaluating and negotiating the Repurchase Agreement and the Repurchase Transaction.
Each of the Sponsors has made customary representations and warranties in the Repurchase Agreement, including, among others, representations and warranties as to their organization, authorization to enter into the Repurchase Agreement, ownership of the Subject Units and necessary consents and approvals. Each of the Partnership Entities has also made customary representations and warranties in the Repurchase Agreement, including, among others, representations and warranties as to their organization, authorization to enter into the Repurchase Agreement and necessary consents and approvals.
The Repurchase Agreement provides that the closing of the Repurchase Transaction is subject to the satisfaction or waiver of customary closing conditions and receipt by HESM OpCo of proceeds in a debt financing transaction in an amount sufficient to pay the aggregate cash consideration payable to the Sponsors in connection with the Repurchase Transaction. The Repurchase Transaction is expected to close in August 2021.
The Repurchase Agreement provides for certain termination rights for both the Partnership Entities and the Sponsors, including if (a) the Repurchase Transaction is not consummated on or before September 30, 2021 or (b) there is a material breach of the terms of the Repurchase Agreement by the other party, which breach cannot be cured within 45 days (or by September 30, 2021 if such date is earlier than the final date of the 45-day period).
The above description of the Repurchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Repurchase Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Relationships
The Company is managed and controlled by GP LLC. GP LLC is wholly owned by Hess Infrastructure Partners GP LLC (“HIP GP”), and HIP GP is owned 50% by HINDL and 50% by GIP. As a result, certain individuals, including officers and directors of Hess Corporation, HINDL, GIP, HIP GP and the General Partner, serve as officers and/or directors of more than one of such other entities. In addition, after giving effect to the Repurchase Transaction, each of HINDL and GIP has beneficial ownership of 449,000 Class A Shares, 114,133,464 Class B Shares and 114,133,464 Class B Units. Such Class A Shares, Class B Shares and Class B Units collectively represent an approximate 90.5% voting interest and 3.6% economic interest in the Company and an approximate 90.5% economic interest in HESM OpCo.
