Hess Midstream LP (NYSE: HESM) (“Hess Midstream”), today announced the execution of a definitive agreement providing for the approximately $100 million repurchase 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 (the “Board”), based on the unanimous approval and recommendation of its conflicts committee composed solely of independent directors.
“With today’s announcement, we again demonstrate our unique and differentiated financial strategy with a focus on consistent and ongoing return of capital to our shareholders,” said Jonathan Stein, Chief Financial Officer of Hess Midstream. “The unit repurchase transaction is expected to provide immediate accretion to our shareholders. Following this unit repurchase, we expect to continue to have more than $1 billion of financial flexibility through 2025 that can be used to support our return of capital framework, including potential additional and ongoing 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 5% annual distribution target, consistent with Hess Midstream’s return of capital framework.
Unit Repurchase Summary
Hess Midstream Operations LP, Hess Midstream’s consolidated subsidiary, agreed to repurchase 3,619,254 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 $27.63, the closing price of the Class A shares on March 27, 2023. As a result of the unit repurchase transaction, public ownership of Hess Midstream on a consolidated basis will increase to approximately 18.3%. The terms of the proposed unit repurchase transaction were unanimously approved by the Board, based on the approval and recommendation of its conflicts committee composed solely of independent directors. The unit repurchase is anticipated to close in March 2023. Hess Midstream expects to fund the unit repurchase through borrowings under its existing revolving credit facility.
