Summary
CenterPoint Energy, Inc. (CNP) announced a strategic move via its subsidiary, CNP Midstream, concerning the pending merger between Energy Transfer LP (ET) and Enable Midstream Partners, LP. CNP Midstream has entered into a Forward Sale Agreement to sell 50,000,000 common units of Energy Transfer it expects to receive as consideration in the merger. This transaction is contingent upon the successful closing of the Energy Transfer/Enable Midstream merger.
Key Highlights
- 1CNP Midstream will sell 50,000,000 Energy Transfer (ET) common units received from the Enable Midstream Partners merger.
- 2The sale is structured as a 'Deal Contingent Equity Forward Transaction', meaning it's dependent on the merger's completion.
- 3The Forward Sale Agreement is with an unspecified investment banking financial institution (Dealer).
- 4The transaction effectively locks in a forward sale price based on ET's closing price on September 21, 2021, subject to adjustments.
- 5CenterPoint Energy, Inc. has provided a guarantee for its subsidiary's obligations under the Forward Sale Agreement.
- 6The agreement allows for early termination under specific conditions, including if the merger is terminated.
Frequently Asked Questions
The primary purpose is for CNP Midstream to pre-arrange the sale of Energy Transfer common units it will receive as part of the Enable Midstream Partners merger consideration, thereby securing proceeds from this portion of the transaction.
The sale is contingent on the successful closing of the merger between Energy Transfer and Enable Midstream Partners. If the merger does not close, the Forward Sale Agreement will not proceed.
CenterPoint Energy has guaranteed the obligations of its subsidiary, CNP Midstream, under the Forward Sale Agreement. This means CNP is on the hook if CNP Midstream cannot fulfill its end of the agreement, although the primary risk is tied to the successful closing of the underlying merger and the value of the Energy Transfer units.
The Forward Sale Agreement sets an initial forward sale price as a percentage of Energy Transfer's closing price on September 21, 2021. This price is subject to certain adjustments as outlined in the agreement.