Magellan Midstream Partners, L.P. (NYSE: MMP - News) and Magellan Midstream Holdings, L.P. (NYSE: MGG - News) today announced a definitive agreement to simplify their capital structure by transforming the incentive distribution rights and approximate 2% economic interest of MMP's general partner into MMP common units. As a result, MGG unitholders will receive 0.6325 MMP common units in exchange for each MGG common unit they own at closing, representing a 25% premium to today's closing price of MGG's common units. The simplification also will result in MGG being dissolved and in MMP owning its general partner, which will no longer have an economic interest in MMP.
The simplification benefits both sets of unitholders by:
* Effectively lowering MMP's cost of capital, allowing it to be more competitive for potential future acquisitions and expansion projects;
* Maintaining MMP's strong balance sheet and liquidity through 100% equity consideration;
* Simplifying the current organizational structure, which should make MMP more attractive to a broader investor base; and
* Reducing administrative costs associated with a second publicly traded entity.
Management's current projections indicate that the simplification will be dilutive to MMP's distributable cash flow per unit initially by about 4% but is expected to provide long-term accretion to unitholders. Based on these projections, management believes that MMP should be able to maintain its current quarterly distribution rate of 71 cents per MMP unit in 2009 and potentially increase distributions in 2010.
MMP's management team will continue in their respective roles. Additionally, three independent members of the board of directors of MGG's general partner will join the board of directors of MMP's general partner following completion of the simplification, filling the three director seats that are currently open.
The terms of the simplification agreement were unanimously approved by the conflicts committee of the board of directors of each partnership's general partner. Each conflicts committee is comprised solely of independent directors and was previously delegated authority to negotiate and authorize the terms of the simplification.
The simplification is expected to be consummated in the third quarter of 2009, subject to customary closing conditions including approval of the unitholders of MMP and MGG.
Financial advisors, who provided fairness opinions, for the simplification are Tudor, Pickering, Holt & Co. Securities, Inc. for the conflicts committee of the board of directors of MMP's general partner and Lazard for the conflicts committee of the board of directors of MGG's general partner.
MMP and MGG will host a conference call on Wed., March 4, at 11 a.m. Eastern to discuss the proposed simplification. To participate in the call, please dial (888) 254-2821 and provide code 4352598. Investors also may listen to the call via MMP's website at http://www.magellanlp.com/webcasts.asp and MGG's website at http://www.mgglp.com/webcasts.asp.
Audio replays of the conference call will be available from 2 p.m. Eastern on March 4 through midnight on March 10. To access the replay, dial (888) 203-1112 and provide code 4352598. The replay also will be available at http://www.magellanlp.com and http://www.mgglp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. is a publicly traded partnership formed to own, operate and acquire a diversified portfolio of energy assets. MMP primarily transports, stores and distributes refined petroleum products. More information is available at http://www.magellanlp.com.
About Magellan Midstream Holdings, L.P.
Magellan Midstream Holdings, L.P. is a publicly traded partnership formed to own the general partner interest and 100% of the incentive distribution rights in MMP.
Contact: Paula Farrell
(918) 574-7650
paula.farrell@magellanlp.com
Source: Magellan Midstream Partners, L.P.; Magellan Midstream Holdings, L.P.
The simplification benefits both sets of unitholders by:
* Effectively lowering MMP's cost of capital, allowing it to be more competitive for potential future acquisitions and expansion projects;
* Maintaining MMP's strong balance sheet and liquidity through 100% equity consideration;
* Simplifying the current organizational structure, which should make MMP more attractive to a broader investor base; and
* Reducing administrative costs associated with a second publicly traded entity.
Management's current projections indicate that the simplification will be dilutive to MMP's distributable cash flow per unit initially by about 4% but is expected to provide long-term accretion to unitholders. Based on these projections, management believes that MMP should be able to maintain its current quarterly distribution rate of 71 cents per MMP unit in 2009 and potentially increase distributions in 2010.
MMP's management team will continue in their respective roles. Additionally, three independent members of the board of directors of MGG's general partner will join the board of directors of MMP's general partner following completion of the simplification, filling the three director seats that are currently open.
The terms of the simplification agreement were unanimously approved by the conflicts committee of the board of directors of each partnership's general partner. Each conflicts committee is comprised solely of independent directors and was previously delegated authority to negotiate and authorize the terms of the simplification.
The simplification is expected to be consummated in the third quarter of 2009, subject to customary closing conditions including approval of the unitholders of MMP and MGG.
Financial advisors, who provided fairness opinions, for the simplification are Tudor, Pickering, Holt & Co. Securities, Inc. for the conflicts committee of the board of directors of MMP's general partner and Lazard for the conflicts committee of the board of directors of MGG's general partner.
MMP and MGG will host a conference call on Wed., March 4, at 11 a.m. Eastern to discuss the proposed simplification. To participate in the call, please dial (888) 254-2821 and provide code 4352598. Investors also may listen to the call via MMP's website at http://www.magellanlp.com/webcasts.asp and MGG's website at http://www.mgglp.com/webcasts.asp.
Audio replays of the conference call will be available from 2 p.m. Eastern on March 4 through midnight on March 10. To access the replay, dial (888) 203-1112 and provide code 4352598. The replay also will be available at http://www.magellanlp.com and http://www.mgglp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. is a publicly traded partnership formed to own, operate and acquire a diversified portfolio of energy assets. MMP primarily transports, stores and distributes refined petroleum products. More information is available at http://www.magellanlp.com.
About Magellan Midstream Holdings, L.P.
Magellan Midstream Holdings, L.P. is a publicly traded partnership formed to own the general partner interest and 100% of the incentive distribution rights in MMP.
Contact: Paula Farrell
(918) 574-7650
paula.farrell@magellanlp.com
Source: Magellan Midstream Partners, L.P.; Magellan Midstream Holdings, L.P.
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