Summit Midstream Corp (NYSE:SMC), a player in the natural gas transmission sector, announced on Monday the completion of a significant transaction that expands its operational capacity. The company, headquartered in Houston, Texas, has entered into a material definitive agreement following an acquisition that enhances its financial structure. According to InvestingPro data, SMC's stock has delivered an impressive 108% return over the past year, despite operating in a volatile market environment.
On December 4, 2024, Summit Midstream Holdings, LLC, along with Tall Oak Midstream Operating, LLC and several other subsidiaries, signed a second supplemental indenture with Regions Bank as trustee and collateral agent. This agreement provides a guarantee for $575 million in aggregate principal amount of 8.625% Senior Secured Second Lien Notes due in 2029. InvestingPro analysis shows the company's total debt stands at $957 million, with an EBITDA of $178.33 million for the last twelve months.
Additionally, the involved parties agreed to a Supplement No. 2 to the Collateral Agreement, granting a lien and security interest in nearly all of the Guarantors' personal property. This measure secures the payment and performance of the Secured Obligations as outlined in the existing Collateral Agreement, subject to certain conditions.
In a parallel move, the Guarantors and Bank of America (NYSE:BAC), N.A., as the administrative agent, entered into a Joinder Agreement to the existing Amended and Restated Loan and Security Agreement. This agreement ensures that the Guarantors provide a lien and security interest in their personal property and guarantee the obligations under the ABL Agreement. They have also become parties to the Intercreditor Agreement through a Grantor Joinder Agreement.
The company recently gained stockholder approval for a significant stock issuance to Tall Oak Midstream Holdings, LLC, which involves the issuance of up to 7,471,008 shares of Class B common stock. This decision is part of a compliance measure with the New York Stock Exchange Listed Company Manual Section 312.03.
The company has also announced its acquisition of Tall Oak Midstream Operating, LLC and its subsidiaries, a move that expands Summit's operational reach into the Arkoma Basin. The acquisition includes a $155 million upfront cash payment and approximately 7.5 million shares of Class B common stock.
In addition to these developments, Summit Midstream Partners, LP has undergone a corporate reorganization, transitioning from a master limited partnership to a C corporation. The company has also launched a tender offer to repurchase up to $215 million of their 8.500% Senior Secured Second Lien Notes due 2026. Lastly, the company has reported strong Q1 results, with a net income of $132.9 million and adjusted EBITDA of $70.1 million.
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