Southcross Energy To Combine With TexStar Midstream Services - Quick Facts

(RTTNews) - Southcross Energy LLC, the owner of the general partner of Southcross Energy Partners, L.P. (SXE), announced that it has entered into a definitive agreement to combine with TexStar Midstream Services, LP, a privately held gas gathering and processing partnership located in the Eagle Ford shale region of South Texas. After the transaction closes, a newly formed company, Southcross Holdings LP will own 100% of the general partner of Southcross Energy Partners and equity interests in Southcross Energy Partners as well as former TexStar assets.

After the closing, the newly formed company will be indirectly owned approximately 36% by EIG Global Energy Partners, 30% by Charlesbank Capital Partners and 34% by Tailwater Capital.

The transaction will create the premier Eagle Ford-focused midstream combination, which will include four processing plants, three fractionation facilities and approximately 3,700 miles of pipeline.

Current management of Southcross Energy Partners and TexStar will fill key operating positions at the new company, which will retain its Dallas headquarters. Key officers of the general partner of Southcross Energy Partners and Southcross Holdings will be David Biegler, the current Chairman and CEO of Southcross, who will be the Chairman and Chief Executive Officer; John Bonn, the current President and Chief Operating Officer of Southcross who will retain that position; Phil Mezey, the current Chief Executive Officer of TexStar who will be Executive Vice President; and Michael Anderson, the current CFO of Southcross who will be Chief Financial Officer.

In conjunction with the closing, Southcross Energy Partners will acquire the TexStar Rich Gas System. The Rich Gas System consists of a 300 MMcf/d cryogenic processing plant, located in Bee County, Texas, and over 230 miles of rich natural gas gathering pipelines with approximately 300 MMcf/d of capacity across the core producing areas extending from Dimmit to Karnes Counties in the liquids-rich window of the Eagle Ford shale. The Rich Gas System will be acquired by Southcross for approximately $450 million, consisting of $180 million in cash and 14.633 million newly-issued payment-in-kind ("PIK") Southcross common units. The acquisition is expected to be accretive to Southcross' distributable cash flow during the first year of operations.