Consolidation is on the upswing in the midstream and infrastructure aspects of the oil and gas industry, and Texas lawyers are among the beneficiaries.
Gibson, Dunn & Crutcher is representing Houston-based American Midstream Partners on its purchase of Southcross Energy Partners and assets of parent Southcross Holdings for $815 million in stock. The deal, announced Wednesday, is expected to boost American Midstream’s enterprise value to $3 billion.
The team included partners Tull Florey and Hillary Holmes in Houston, corporate associates Needhi Vasavada in Dallas and Justine Robinson in Houston and tax partner James Chenoweth in Houston. Attorneys from the firm’s New York and Denver offices also pitched in.
Florey and Holmes have worked with American Midstream before, advising it in July on the sale of its propane marketing and services business to the Netherlands’ SHV Energy for $170 million.
American Midstream’s in-house counsel on the deal is associate general counsel Tom Leslie. The Louisiana State-trained lawyer joined the company in 2016 after stints as an associate in the Houston offices of Sidley Austin and Baker Botts (the latter is where Florey and Holmes worked before joining Gibson Dunn’s new Houston office earlier this year). Before that Leslie was a captain in the U.S. Army, serving in Baghdad and Friedberg, Germany.
Andrews Kurth Kenyon counseled private equity firm ArcLight Capital Partners, which owns about 27 percent of American Midstream’s shares. The Houston-based team included partners Mike O’Leary, Tom Ford, Angela Richards, Allison Mantor and Matt Grunert and associates Freddy Feldman, Garrett Hughey and Jared Grodin.
Locke Lord served as legal counsel to Dallas-based Southcross Holdings and Southcross Energy. The team was led by partners Michelle Earley in Austin and partner Bill Swanstrom and senior counsel Ann Williams in Houston.
Other Locke Lord attorneys working on the deal were partners John Arnold, Michael Blankenship, Jerry Higdon, Ed Razim, Mitch Tiras and Jeff Wallace; senior counsel Michelle Gutierrez-Begin; associates Elizabeth Corey, Laura Ferguson, Emily Hejl, Kerstie Moran, Ben Smolij and Burke Wendt, all of Houston; and partner Van Jolas in Dallas. The firm’s Boston, Chicago and New York offices also helped out.
Locke Lord’s Swanstrom has worked before with Southcross Holdings’ backer Tailwater Capital, which rescued it from bankruptcy last year with a $170 million infusion of capital along with EIG Global Energy Partners. Last month he represented it on the sale of Dallas-based Align Midstream to Enable Midstream Partners for $300 million. Tailwater is led by Jason Downie, a former partner at HM Capital, the successor firm to Hicks, Muse, Tate & Furst.
Akin Gump Strauss Hauer & Feld counseled the conflicts committee of Southcross Energy, including partners John Goodgame, Lisa Hearn and Alison Chen and associates Chase Armbrust and Leana Garipova, all of Houston.
Jeff Dinerstein, a partner at Jones Day in Houston, is advising the special committee of Southcross Holdings.
Southcross’ general counsel is Kelly Jameson. Before joining the partnership in 2015, the Oklahoma City University-educated lawyer was associate general counsel at USA Compression Partners and general counsel of Crestwood Midstream Partners. He previously worked for TransCanada as senior counsel for its U.S. subsidiaries, El Paso Corp. as senior counsel and Cornerstone Natural Gas Co as general counsel.
Deutsche Bank and BofA Merrill Lynch provided financial advice to American Midstream on the deal. RBC Capital Markets and Wells Fargo Securities assisted Southcross Holdings and Southcross Energy. Tudor, Pickering, Holt & Co. advised Southcross Holdings’ special committee and Jefferies aided Southcross Energy’s conflicts committee.
American Midstream said the deal adds onshore gathering, processing and transmission services in the highly economic Eagle Ford Shale play in South Texas as well as the southeast gas transmission market. Leadership says it also expands its commercial and operational capabilities and should increase its EBITDA to $300 million next year.
“This transaction accelerates our transformation into a fully integrated gathering, processing and transmission company focused in select core areas,” American Midstream chairman, CEO and president Lynn Bourdon III said in a statement.
American Midstream plans to sell $400 million to $500 million worth of assets to help reduce debt and add growth capital, a move that could generate more fees for Texas lawyers.
Moody’s Investors Service placed American Midstream’s credit ratings under review for possible downgrade after the announcement, saying the deal is “leveraging” and adds exposure to gathering and processing in areas of the Eagle Ford with limited volume growth prospects at least through the end of next year.