American Midstream Partners (“AMID”), based in west Houston, is going private. It has agreed to an offer of $5.25 per common unit from affiliates of ArcLight, a PE firm based in Boston that concentrates on energy infrastructure investments. ArcLight already owns 51% of American Midstream, so the deal should close in the 2nd quarter.
The company was formed in 2009 and went public in 2011. It moved its head office from Denver to Houston in 2016. The company made a lot of acquisitions, mainly financed by debt.
The stock units were trading over $11 in July 2018 before the company decided to cut its distribution by 75%. That resulted in the stock price dropping to $6. Three days later, Southcross Energy Partners called off its merger with AMID. This was due to AMID’s inability to obtain satisfactory financing. AMID had to pay a $17 million termination fee.
ArcLight offered to buy AMID in September for $6.10/unit and, again in January 2019, for $4.50/unit.
The company also disclosed that it would not file its 2018 annual report in a timely manner due to the time devoted to the merger. It also disclosed a going concern issue as its $600 million credit facility expires in September 2019 and there are no assurances that the facility will be extended or replaced.
The company also disclosed that, once again, it will have a material weakness in internal controls over financial reporting. The company has disclosed such weaknesses annually since 2013.
In July 2018 it also delayed the filing of its quarterly report because the head office suffered from a waterline leak that caused water damage and electrical system failure. That stopped key personnel from reviewing and finalizing the 10-Q.
The Houston office has a well-known reputation for miserable working conditions, with long hours and a lack of resources causing an extremely high turnover of staff. As a public company, it will not be missed.