PITTSBURGH, July 27, 2020 /PRNewswire/ -- CNX Resources
Corporation (NYSE: CNX) ("CNX") and CNX Midstream Partners LP
(NYSE: CNXM) ("CNX Midstream" or the "Partnership") today announced
that they have entered into a definitive merger agreement pursuant
to which CNX will acquire all of the outstanding common units of
CNX Midstream that it does not already own in exchange for CNX
common stock valued at approximately $357
million, based on the most recent closing price of CNX
common stock.
Under the merger agreement, each outstanding common unit of CNX
Midstream that CNX does not already own will be converted into 0.88
shares of CNX common stock, representing a 15% premium to the
average exchange ratio during the 30 trading days ended
July 24, 2020.
"We believe that this take-in transaction of CNX Midstream
Partners is the optimal solution for all relevant stakeholders
given the near- and long-term view of the MLP market," commented
Nicholas J. DeIuliis, president and
CEO. "We expect the combined entity to be an even stronger company
with a lower cost of capital and increased investable free cash
flow."
Don W. Rush, CFO, added,
"Following the completion of the transaction, CNX is expected to be
the lowest cost producer in the Appalachian Basin, with increased
operational flexibility and basin leading operational metrics.
Stockholders of CNX and unitholders of CNX Midstream are expected
to benefit from a combination of synergies including improved
equity trading liquidity, enhanced financial flexibility to
optimize cash flows, and an improved credit profile."
Additional Transaction Terms and Details
Pursuant to the terms of the merger agreement, CNX will acquire
all of the approximately 42.1 million outstanding common units
of CNX Midstream that it does not already own at a fixed exchange
ratio of 0.88 shares of CNX common stock for each publicly held
common unit of CNX Midstream. CNX Midstream common units will
no longer be publicly traded after the transaction. In aggregate,
CNX will issue approximately 37 million shares in connection with
the proposed transaction, representing approximately 17 percent of
the total shares outstanding of the pro forma combined entity.
Following completion of the transaction, all senior notes of CNX
Midstream will remain outstanding and no additional payments will
be made to CNX in connection with the elimination of the incentive
distribution rights transaction from January of this year. The
transaction terms were negotiated, reviewed and approved by the
Conflicts Committee of the CNXM Board and approved by the CNXM
Board. The CNX Midstream Conflicts Committee is composed of the
independent members of the CNXM Board. The Board of Directors of
CNX also approved the merger agreement.
Conditions to Closing
Subject to customary approvals and conditions, the transaction
is expected to close in the fourth quarter of 2020. The
transaction is subject to majority approval by CNX Midstream common
unitholders and the effectiveness of a registration statement
related to the issuance of the new CNX shares to CNX Midstream's
unitholders. Pursuant to a support agreement entered into in
connection with the transaction, CNX has agreed to vote
the CNXM common units that it owns in favor of the
transaction. CNX currently owns approximately 53.1% of
the outstanding common units.
Advisors
Citi is acting as exclusive financial advisor and Latham &
Watkins LLP is acting as legal advisor to CNX. Intrepid Partners,
LLC is acting as exclusive financial advisor and Baker Botts L.L.P.
is acting as legal advisor to the Conflicts Committee of the CNXM
Board.
Distribution Declaration
The Board of Directors of CNX Midstream GP LLC (the "CNXM
Board"), which is the general partner of the Partnership, has
declared a cash distribution of $0.50
per unit with respect to the second quarter of 2020. The
distribution will be made on August 14,
2020 to unitholders of record as of the close of business on
August 7, 2020. Pursuant to the
merger agreement, CNX Midstream may not make any other
distributions on the common units without the consent of CNX.
Video Presentation
CNX and the Partnership have pre-recorded a video presentation
that thoroughly examines the transaction and its implications,
which will be available at 6:45 a.m. Eastern
Time on Monday, July 27. To access the video presentation
please click here, or visit the "Investor Relations" page of CNX's
website at www.cnx.com, or on the 'News and Events' page of the CNX
Midstream website at cnxmidstream.com. Any presentation materials
will be available on each company's website.
Conference Call Details
CNX and the Partnership will host a live webcast on July 27, 2020 to discuss the transaction. The
call will begin at 9:00am Eastern
Time followed by a live Q&A session with management.
To access the webcast, please visit the "Investor Relations"
page of CNX's website at www.cnx.com, or on the 'News and Events'
page of the CNX Midstream website at cnxmidstream.com. Any
presentation materials will be available on each company's
website.
Alternatively, the call and Q&A can be accessed as
follows:
- Dial-In: 1-855-656-0928 (domestic) or 1-412-902-4112
(international)
- Reference: "CNX and CNX Midstream Call"
A replay of the call will be available on CNX's website for
approximately seven days.
Earnings Calls
As previously disclosed, CNX will hold its earnings call for the
second quarter on Thursday, July 30.
Conference Call Information
CNX Resources (NYSE: CNX)
- 10:00 a.m. ET: Thursday, July 30
- Dial-In: 855-656-0928 (domestic) 412-902-4112
(international)
- Reference "CNX Resources Call"
- Webcast: investors.cnx.com
In light of the transaction announcement, CNX Midstream has
cancelled its previously announced earnings call scheduled for
July 30.
About CNX Resources
CNX Resources Corporation (NYSE: CNX) is one of the largest
independent natural gas exploration, development and production
companies, with operations centered in the major shale formations
of the Appalachian basin. CNX deploys an organic growth strategy
focused on responsibly developing its resource base. As of
December 31, 2019, CNX had 8.4
trillion cubic feet equivalent of proved natural gas reserves. CNX
is a member of the Standard & Poor's Midcap 400 Index.
Additional information may be found at www.cnx.com.
About CNX Midstream Partners
CNX Midstream Partners LP (NYSE: CNXM) is a master limited
partnership that owns, operates, develops and acquires
gathering and other midstream energy assets to service natural gas
production in the Appalachian Basin in Pennsylvania and West Virginia. CNXM's assets include natural
gas gathering pipelines and compression and dehydration facilities,
as well as condensate gathering, collection, separation and
stabilization facilities. More information is available on CNXM's
website www.cnxmidstream.com.
Cautionary Statements
Various statements in this release, including those that express
a belief, expectation or intention, may be considered
forward-looking statements (as defined in Section 21E of the
Securities Exchange Act of 1934, as amended, and Section 27A of the
Securities Act) that involve risks and uncertainties that could
cause actual results to differ materially from projected results.
Without limiting the generality of the foregoing, forward-looking
statements contained in this communication include statements
relying on a number of assumptions concerning future events and are
subject to a number of uncertainties and factors, many of which are
outside the control of CNX and CNX Midstream, which could cause
actual results to differ materially from such statements.
Accordingly, investors should not place undue reliance on
forward-looking statements as a prediction of actual results. The
forward-looking statements may include, but are not limited to,
statements regarding the expected benefits of the proposed
transaction to CNX and CNX Midstream and their stockholders and
unitholders, respectively; the anticipated completion of the
proposed transaction and the timing thereof; the expectation that
CNX votes the CNXM common units that it owns in favor of the
proposed transaction; and plans and objectives of management for
future operations. When we use the words "believe," "intend,"
"expect," "may," "should," "anticipate," "could," "estimate,"
"plan," "predict," "project," or their negatives, or other similar
expressions, the statements which include those words are usually
forward-looking statements. When we describe strategy that involves
risks or uncertainties, we are making forward-looking
statements.
While CNX and CNX Midstream believe that the assumptions
concerning future events are reasonable, they caution that there
are inherent difficulties in predicting certain important factors
that could impact the future performance or results of their
businesses. Among the factors that could cause results to differ
materially from those indicated by such forward-looking statements
are: the failure to realize the anticipated costs savings,
synergies and other benefits of the transaction; the possible
diversion of management time on transaction-related issues; the
risk that the requisite approvals to complete the transaction are
not obtained; local, regional and national economic conditions and
the impact they may have on CNX, CNX Midstream and their customers;
the impact of outbreaks of communicable diseases such as the novel
highly transmissible and pathogenic coronavirus (COVID-19) on
business activity, CNX's and CNXM's operations and national and
global economic conditions, generally; conditions in the oil and
gas industry, including a sustained decrease in the level of supply
or demand for oil or natural gas or a sustained decrease in the
price of oil or natural gas; the financial condition of CNX's or
CNX Midstream's customers; any non-performance by customers of
their contractual obligations; changes in customer, employee or
supplier relationships resulting from the transaction; changes in
safety, health, environmental and other regulations; the results of
any reviews, investigations or other proceedings by government
authorities; and the performance of CNX Midstream.
The forward-looking statements in this press release speak only
as of the date of this press release; we disclaim any obligation to
update these statements. We have based these forward-looking
statements on our current expectations and assumptions about future
events. While our management considers these expectations and
assumptions to be reasonable, they are inherently subject to
significant business, economic, competitive, regulatory and other
risks, contingencies and uncertainties, most of which are difficult
to predict and many of which are beyond our control. These risks,
contingencies and uncertainties relate to, among other matters, the
risks and uncertainties set forth in the "Risk Factors" section of
CNX's Annual Report on Form 10-K for the year ended December 31, 2019, and Quarterly Report on Form
10-Q for the three months ended March 31,
2020, each filed with the Securities and Exchange
Commission, and any subsequent reports filed with the Securities
and Exchange Commission.
No Offer or Solicitation
This release is for informational purposes only and shall not
constitute an offer to sell or the solicitation of an offer to buy
any securities pursuant to the transaction or otherwise, nor shall
there be any sale of securities in any jurisdiction in which the
offer, solicitation or sale would be unlawful prior to the
registration or qualification under the securities laws of any such
jurisdiction. No offer of securities shall be made except by means
of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended.
Important Additional Information Regarding the Transaction
Will Be Filed With the SEC
In connection with the proposed transaction, CNX will file a
registration statement on Form S-4, including a consent
statement/prospectus of CNX and CNX Midstream, with the SEC.
INVESTORS AND SECURITY HOLDERS OF CNX AND CNX MIDSTREAM ARE ADVISED
TO CAREFULLY READ THE REGISTRATION STATEMENT AND CONSENT
STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS
THERETO) WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE TRANSACTION, THE PARTIES TO THE
TRANSACTION AND THE RISKS ASSOCIATED WITH THE TRANSACTION. A
consent statement/prospectus will be sent to security holders of
CNX Midstream in connection with the solicitation of consents of
CNX Midstream unitholders. Investors and security holders may
obtain a free copy of the consent statement/prospectus (when
available) and other relevant documents filed by CNX and CNX
Midstream with the SEC from the SEC's website at www.sec.gov.
Security holders and other interested parties will also be able to
obtain, without charge, a copy of the consent statement/prospectus
and other relevant documents (when available) from www.cnx.com
under the tab "Investor Relations" and then under the heading "SEC
Filings."
Participants in the Solicitation
CNX, CNX Midstream and their respective directors, executive
officers and certain other members of management may be deemed to
be participants in the solicitation of consents in respect of the
transaction. Information about these persons is set forth in
CNX's proxy statement relating to its 2020 Annual Meeting of
Stockholders, which was filed with the SEC on March 24, 2020, and CNX Midstream's Annual Report
on Form 10-K and Form 10-K/A for the year ended December 31, 2019, which were filed with the SEC
on February 10, 2020 and April 27, 2020, respectively, and subsequent
statements of changes in beneficial ownership on file with the
SEC. Security holders and investors may obtain additional
information regarding the interests of such persons, which may be
different than those of the respective companies' security holders
generally, by reading the consent statement/prospectus and other
relevant documents regarding the transaction, which will be filed
with the SEC.
View original content to download
multimedia:http://www.prnewswire.com/news-releases/cnx-resources-corporation-to-acquire-remaining-public-stake-in-cnx-midstream-partners-lp-301099849.html
SOURCE CNX Resources Corporation; CNX Midstream Partners LP