Southcross Energy Partners LP (NYSE: SXE) said July 30 it terminated its merger agreement with American Midstream Partners LP (NYSE: AMID) due to funding issues.
American Midstream said late last year it reached an agreement to acquire Southcross Energy Partners and assets from Southcross Holdings LP in two transactions totaling $815 million. The company billed the Southcross deal as a partnership and expected the acquisition to capture natural gas and NGL growth from the rebounding Eagle Ford Shale.
As part of the purchase price, American Midstream aimed to repay the Southcross companies’ $654 million debt through asset sales, borrowings and proceeds from bonds and equity raises. The company planned to monetize up to $500 million of noncore assets primarily related to its terminaling services segment.
However, American Midstream reached agreements so far this year to sell its marine products terminals for $210 million and refined products terminals for $138.5 million, failing to meet its asset sales target.
Further, the company said July 27 it is now evaluating options for the sale of its refined products terminals due to delays in obtaining federal regulatory approval. The sale of its marine products terminals is still expected to close early August
The Southcross companies said the termination of the merger agreement, effective July 29, was as a result of funding failure by American Midstream. Under the terms of the agreement, Southcross Holdings is entitled to receive a $17 million termination fee, a portion of which will be used to reimburse certain of Southcross Energy’s transaction costs.
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