Deal Description: Arc Logistics Partners LP (NYSE: ARCX) ("Arc Logistics" or the "Partnership"), Lightfoot Capital Partners GP LLC (“LCP GP”) and Lightfoot Capital Partners, LP (“LCP LP”, and together with LCP GP, “Lightfoot”) announced today that they have entered into a Purchase Agreement and Plan of Merger (the “Merger Agreement”) with Zenith Energy U.S., L.P. (together with its affiliates, “Zenith”), a portfolio company of Warburg Pincus, pursuant to which Zenith will acquire Arc Logistics GP LLC (“Arc GP”), the general partner of the Partnership (the “GP Transfer”) and all of the outstanding common units in Arc Logistics (the “Merger” and, together with the GP Transfer, the “Proposed Transaction”). Under the terms of the Merger Agreement, all Arc Logistics common unitholders, other than Lightfoot, will receive $16.50 per common unit in cash for each common unit they own, which represents a premium of approximately 15% to the Partnership’s common unit price as of August 28, 2017. LCP LP will receive $14.50 per common unit in cash for the approximately 5.2 million common units held by it, and LCP GP will receive $94.5 million for 100% of the membership interests in Arc GP.
In connection with the Proposed Transaction, the Board of Directors of Arc GP (the “Arc Board”) formed a conflicts committee (the “Conflicts Committee”), composed of independent directors of the Arc Board, to review, evaluate and negotiate the Merger. The Conflicts Committee approved the Merger Agreement and the Merger, determined that the Merger Agreement and the Merger are fair and reasonable to and in the best interests of the Partnership and the holders of common units (other than Lightfoot and its controlling affiliates) and recommended that the Arc Board and holders of common units approve the Merger Agreement and the Merger. Following recommendation and approval from the Conflicts Committee, the Arc Board unanimously approved the Merger Agreement and the Merger and is recommending that all Arc Logistics common unitholders vote in favor of the Merger Agreement and the Merger.
The completion of the Proposed Transaction is subject to a number of closing conditions, including approval by a majority of the outstanding Arc Logistics common unitholders and the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Lightfoot, the owner of Arc GP, and approximately 26.8% of the outstanding common units, have executed an agreement to vote in support of the Proposed Transaction. Additionally, the Proposed Transaction is subject to (i) the closing of the purchase by Zenith and Lightfoot from EFS Midstream Holdings LLC of certain of the interests in Arc Terminals Joliet Holdings, LLC, which indirectly owns among other things a crude oil unloading facility and a 4-mile crude oil pipeline in Joliet, Illinois and (ii) the closing of the purchase by Zenith of an approximately 5.5% interest (and, subject to certain conditions, an additional approximately 4.2% interest) in Gulf LNG Holdings Group, LLC, which owns a liquefied natural gas regasification and storage facility in Pascagoula, Mississippi, from Lightfoot. The Proposed Transaction is not subject to a financing condition and closing is targeted at the end of the fourth quarter of 2017 or early in the first quarter of 2018.
Baker Botts represented the Conflicts Committee of Arc GP.
Target: Arc Logistics Partners LP, Arc GP, Arc Terminals Joliet Holdings, LLC, and Gulf LNG Holdings Group, LLC.
Client: The Conflicts Committee of Arc GP
Outside Counsel to Lightfoot, Arc GP and Arc Logistics: Vinson & Elkins, LLP
Other party: Zenith Energy
Counsel to Zenith Energy: Kirkland & Ellis LLP
Other party: EFS Midstream Holdings LLC
Counsel to EFS Midstream Holdings LLC: Sidley Austin LLP
Baker Botts Lawyers/Office Involved:
- Corporate: Joshua Davidson (Partner, Houston); Jeremy Moore (Partner, Houston); Travis Wofford (Senior Associate, Houston); Laura Katherine Mann (Associate, Houston); Zahra Usmani (Associate, Houston)
- Tax: Steve Marcus (Partner, Dallas)
- Executive Compensation: J. Rob Fowler (Partner, Houston); Chris Pratt (Special Counsel, Houston)
- Litigation: Ryan Bull (Partner, Washington)
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