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Hess Midstream LP (NYSE:HESM) ("Hess Midstream"), today announced the execution of a definitive agreement providing for the repurchase of approximately $100 million of Class B units by its subsidiary, Hess Midstream Operations LP, from affiliates of Hess Corporation and Global Infrastructure Partners, Hess Midstream's sponsors (the "Sponsors"). The terms of the proposed unit repurchase transaction were unanimously approved by the Board of Directors of Hess Midstream's general partner, based on the unanimous approval and recommendation of its conflicts committee composed solely of independent directors.
"We continue to execute unit repurchase transactions as part of our unique and differentiated financial strategy, which prioritizes consistent and ongoing return of capital to our shareholders," said Jonathan Stein, Chief Financial Officer of Hess Midstream. "Since the beginning of 2021 through this current transaction, we will have returned $1.55 billion to shareholders through accretive unit repurchases from our Sponsors that have reduced the total unit count by approximately 20%. Following this unit repurchase, which is expected to provide immediate accretion to our shareholders, we expect to continue to have more than $1 billion of financial flexibility through 2025 that can be used to support potential incremental unit repurchases."
Pursuant to the terms of the repurchase agreement, the repurchased units will be cancelled upon the closing of the unit repurchase transaction, which is expected to result in increased distributable cash flow per Class A share providing capacity for incremental distribution growth above Hess Midstream's annual distribution target of at least 5% through 2025, consistent with Hess Midstream's return of capital framework.
Unit Repurchase Summary
Hess Midstream Operations LP, Hess Midstream's consolidated subsidiary, agreed to repurchase 3,370,407 Class B units of Hess Midstream Operations LP, equal to approximately 1.5% of the consolidated company, held by the Sponsors for an aggregate purchase price of approximately $100 million. The purchase price per Class B unit is $29.67, the closing price of the Class A shares on November 13, 2023. After completing the unit repurchase transaction, ownership of Hess Midstream on a consolidated basis will be approximately 29.8% for the public, 32.4% for Global Infrastructure Partners and 37.8% for Hess Corporation. The unit repurchase is anticipated to close on November 16, 2023. Hess Midstream expects to fund the unit repurchase through borrowings under its existing revolving credit facility.
Posted In: HESM
