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CENTERPOINT ENERGY INC 8-K Report, Acquisition Completed (May 7, 2013)

Filed May 7, 2013For Securities:CNP

Summary

CenterPoint Energy, Inc. (CNP) has officially completed the formation of a new midstream partnership, effective May 1, 2013. This partnership, initially structured as a private limited partnership, involves CenterPoint, OGE Energy Corp. (OGE), and affiliates of ArcLight Capital Partners, LLC. CenterPoint contributed its midstream assets, including various subsidiaries and a stake in Southeast Supply Header, LLC, to the newly formed entity, now named CenterPoint Energy Field Services LP. OGE and ArcLight contributed their midstream businesses, primarily Enogex LLC. The formation is a significant strategic move, creating a combined midstream platform that is intended to be eventually taken public via an Initial Public Offering (IPO). CenterPoint currently holds the largest limited partner interest (approximately 58.3%), with OGE and ArcLight holding significant stakes as well. The governance structure of the partnership's general partner is equally shared by CenterPoint and OGE, highlighting a collaborative management approach.

Key Highlights

  • 1CenterPoint Energy, Inc. closed on the formation of a new midstream partnership on May 1, 2013, with OGE Energy Corp. and ArcLight Capital Partners affiliates.
  • 2The partnership, initially named CenterPoint Energy Field Services LP, combines the midstream assets of CenterPoint and OGE.
  • 3CenterPoint Energy Resources Corp. (CERC), a subsidiary, converted its subsidiary CEFS into the partnership and contributed various midstream entities and interests.
  • 4OGE and ArcLight contributed 100% of Enogex LLC to the partnership.
  • 5CenterPoint holds a 58.3% limited partner interest, OGE holds 28.5%, and Bronco Group holds 13.2%.
  • 6CenterPoint and OGE equally control the general partner of the Midstream Partnership, with a 50/50 ownership of management rights.
  • 7The partnership has secured a $1.05 billion three-year senior unsecured term loan facility and a $1.4 billion five-year senior unsecured revolving credit facility.

Frequently Asked Questions

The primary purpose is to combine the midstream assets of CenterPoint Energy and OGE Energy Corp. into a single, larger platform. This consolidated entity is intended to be eventually pursued for an Initial Public Offering (IPO), allowing for potential future monetization and strategic flexibility.

CenterPoint Energy holds approximately 58.3% of the limited partner interests in the Midstream Partnership. Furthermore, CenterPoint and OGE equally (50/50) control the general partner of the Midstream Partnership, which manages its operations and holds incentive distribution rights after an IPO.

The Midstream Partnership has secured significant financing, including a $1.05 billion three-year senior unsecured term loan facility and a $1.4 billion five-year senior unsecured revolving credit facility. These facilities are intended to fund operations and refinance existing debt.

The parties involved have agreed to initiate the process for an IPO. The partnership is required to file a registration statement by May 1, 2014, and generally consummate the IPO within 180 days of that filing, subject to market conditions and negotiation of terms. However, CenterPoint notes there are no assurances the IPO will be consummated.