Item 1.01. Entry Into a Material Definitive Agreement.
Merger Agreement
On April 25, 2018, Rice Midstream Partners LP, a Delaware limited partnership (RMP) and a subsidiary of EQT Corporation (EQT), entered into an Agreement and Plan of Merger (the Merger Agreement) with Rice Midstream Management LLC, a Delaware limited liability company and the general partner of RMP (the RMP General Partner), EQT Midstream Partners, LP, a Delaware limited partnership and subsidiary of EQT (EQM), EQT Midstream Services, LLC, a Delaware limited liability company and the general partner of EQM (the EQM General Partner), EQM Acquisition Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of EQM (Merger Sub), EQM GP Acquisition Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of EQM (GP Merger Sub), and, solely for purposes of certain provisions therein, EQT.
Upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into RMP (the Merger), with RMP continuing as the surviving entity and a wholly owned subsidiary of EQM. The Merger Agreement also provides that GP Merger Sub will merge with and into the RMP General Partner, with the RMP General Partner continuing as the surviving entity and a wholly owned subsidiary of EQM. Following the recommendation of the conflicts committee (the RMP Conflicts Committee) of the board of directors of the RMP General Partner (the RMP Board), the RMP Board approved the Merger Agreement, agreed to submit the Merger Agreement to a vote of RMP unitholders and agreed to recommend that RMPs unitholders adopt the Merger Agreement. Following the recommendation of the conflicts committee (the EQM Conflicts Committee) of the board of directors of the EQM General Partner (the EQM Board), the EQM Board approved the Merger Agreement.
At the effective time of the Merger (the Effective Time), (i) each common unit representing a limited partner interest in RMP (each, an RMP Common Unit) issued and outstanding immediately prior to the Effective Time will be converted into the right to receive 0.3319 (the Exchange Ratio) common units representing limited partner interests in EQM (the EQM Common Units) (the Merger Consideration), (ii) the issued and outstanding incentive distributions rights of RMP (the RMP IDRs) will be cancelled and (iii) each outstanding award of phantom units in respect of RMP Common Units will be fully vested and converted into the right to receive the Merger Consideration, less applicable tax withholding, in respect of each RMP Common Unit subject thereto.
RMP has agreed, subject to certain exceptions with respect to unsolicited proposals, not to directly or indirectly solicit competing acquisition proposals or to enter into discussions concerning, or provide confidential information in connection with, any unsolicited alternative business combinations. However, the RMP Board and the RMP Conflicts Committee may change its recommendation in favor of the adoption of the Merger Agreement if, (i) in connection with the receipt of an alternative proposal, it determines in good faith, after consultation with its financial advisors and outside counsel, that the failure to effect such a change in recommendation would be inconsistent with its duties under applicable law as modified by RMPs partnership agreement or (ii) in connection with a material event, circumstance, change or development that arises or occurs after the date of the Merger Agreement and that was not reasonably foreseeable at the time of the Merger Agreement, it determines in good faith, after consultation with its financial advisors and outside counsel, that the failure to effect such a change in recommendation would be inconsistent with its duties under applicable law as modified by RMPs partnership agreement.
The completion of the Merger is subject to the satisfaction or waiver of certain customary closing conditions, including, but not limited to: (i) approval of the Merger Agreement by a majority of RMPs unitholders, (ii) approval for listing of the EQM Common Units issuable as Merger Consideration on the New York Stock Exchange, (iii) there being no law or injunction prohibiting the consummation of the transactions contemplated by the Merger Agreement, (iv) expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the HSR Act), (v) the effectiveness of a registration statement on Form S-4 relating to the EQM Common Units issuable as Merger Consideration, (vi) subject to specified materiality standards, the accuracy of the representations and warranties of the other party, (vii) compliance by the other party in all material respects with its covenants, (viii) the receipt by EQM and RMP of certain tax opinions covering such matters as described in the Merger Agreement, (ix) the Drop-Down Transactions (as defined below) having been completed or being capable of completion substantially simultaneously with the completion of the Merger, and (x) the IDR Transaction (as defined below) having been completed.
EQM and RMP have made customary representations and warranties in the Merger Agreement. The Merger Agreement also contains customary covenants and agreements, including covenants and agreements relating to (i) the conduct of each of EQMs and RMPs business between the date of the signing of the Merger Agreement
2
and the closing date of the Merger and (ii) the efforts of the parties to cause the Merger to be completed, including actions which may be necessary to cause the expiration or termination of the waiting period under the HSR Act, if applicable. Pursuant to the terms of the Merger Agreement, EQM and RMP have agreed to (including to cause their respective subsidiaries to) use their reasonable best efforts to resolve any objections that a governmental authority may assert under antitrust laws with respect to the Merger, and to avoid or eliminate each and every impediment under any antitrust law that may be asserted by any governmental authority with respect to the Merger, in each case, so as to enable the closing of the Merger to occur as promptly as practicable and in any event no later than on December 31, 2018.
The Merger Agreement contains certain termination rights for EQM and RMP. The Merger Agreement further provides that, upon termination of the Merger Agreement under certain circumstances, (i) RMP may be required to reimburse EQMs expenses up to $5 million or pay EQM a termination fee equal to $63.4 million less any previous reimbursements by RMP, and (ii) EQM may be required to reimburse RMPs expenses up to $5 million.
EQT has agreed that until the Effective Time or termination of the Merger Agreement, it will vote all limited partner interests in RMP owned beneficially or of record by it or any of its subsidiaries in favor of approval of the Merger and the approval of any actions required in furtherance thereof. As of the date of the Merger Agreement, EQT indirectly owned 100% of the outstanding limited liability company interests in the RMP General Partner and approximately 28.1% of the outstanding RMP Common Units. As of the date of the Merger Agreement, EQT also indirectly owned 100% of the outstanding limited liability company interests in EQT GP Services, LLC, the general partner (the EQGP General Partner) of EQT GP Holdings, LP, a Delaware limited partnership (EQGP), and approximately 90.1% of the outstanding common units representing limited partner interests in EQGP (each, an EQGP Common Unit), and EQGP owned 100% of the outstanding limited liability company interests in the EQM General Partner and approximately 27.1% of the outstanding EQM Common Units. As a result of the Merger, RMPs common units will no longer be publicly traded. RMP expects to close the Merger during the third quarter of 2018.
The Merger Agreement is attached hereto as Exhibit 2.1 and is incorporated herein by reference. The foregoing summary has been included to provide investors and security holders with information regarding the terms of the Merger Agreement and is qualified in its entirety by the terms and conditions thereof. It is not intended to provide any other factual information about EQT, EQM or RMP or their respective subsidiaries and affiliates. The Merger Agreement contains representations and warranties by the respective parties thereto, which were made only for purposes of the Merger Agreement and as of specified dates. The representations, warranties and covenants in the Merger Agreement were made solely for the benefit of the applicable parties thereto, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of EQT, EQM or RMP or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in EQTs, EQMs or RMPs public disclosures.
Item 7.01. Regulation FD Disclosure.
On April 26, 2018, EQM, EQGP and RMP issued a joint news release announcing their entry into the Merger Agreement, the RMP IDR Purchase Agreement (as defined below) and the Drop-Down Agreement, as applicable. A copy of the news release containing the announcement is attached hereto as Exhibit 99.1 and incorporated by reference herein.
The information in this Item 7.01 of Form 8-K (including Exhibit 99.1) shall not be deemed to be filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liability of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the Securities Act), or the Exchange Act, regardless of the general incorporation language of such filing, except as shall be expressly set forth by specific reference in such filing.
3