KKR & Co. Inc. (NYSE:KKR) and SemGroup Corporation (NYSE:SEMG) entered into share purchase agreement to acquire Meritage Midstream ULC from Meritage Midstream Services III, LP for CAD 600 million on January 9, 2019. The purchase price includes an estimated capex reimbursement of CAD 100 million through 2018. Under the terms, Meritage Midstream and its midstream infrastructure assets will be acquired. Upon entry into the share purchase agreement, CAD 600 million were paid to Dentons Canada LLP, as escrow agent, as a deposit (to be applied against the estimated purchase price at the Meritage Midstream closing. In a related transaction, SemGroup and KKR will form a joint venture called SemCAMS Midstream ULC. SemGroup will own 51% and KKR to own 49% of the new company, SemCAMS Midstream ULC. The transaction will be financed with a combination of funds from KKR Global Infrastructure Investors III and a fully-underwritten SemCAMS Midstream credit facility. SemCAMS Midstream's underwritten credit facility commitment is being provided by a syndicate of banks led by TD Securities, CIBC Capital Markets, BMO Capital Markets, and includes a CAD 350 million senior secured amortizing term loan facility and CAD 450 million senior secured revolving credit facility. These facilities will be used to fund a portion of the Meritage acquisition, future growth projects and ongoing working capital requirements. KKR Global Infrastructure Investors III and its affiliated investment vehicles will contribute CAD 815 million of cash, of which CAD 300 million will be used to acquire perpetual preferred shares of SemCAMS Midstream, which will pay quarterly dividends at an annual rate of 8.75%.

The transaction is subject to regulatory and antitrust approvals, customary approvals and closing conditions. The deal is expected to close during the first quarter of 2019. CIBC Capital Markets and Evercore acted as financial advisors to SemGroup. TD Securities acted as financial advisor to KKR. RBC Capital Markets acted as financial advisor to Meritage Midstream and Riverstone, parent of Meritage Midstream Services III, LP. Steven Talley of Gibson, Dunn & Crutcher LLP; and, Osler, Hoskin & Harcourt LLP acted as legal advisors to SemGroup. Torys LLP and Breen Haire, Jacqui Bogucki, Brian Steinhardt and James Doyle of Simpson Thacher & Bartlett acted as legal advisors to KKR. Dentons Canada LLP and Doug Bland, Dan Komarek, David Peck, Jason McIntosh, Allyson Seger, Sarah Mitchell, Tzvi Werzberger and Ramey Layne of Vinson & Elkins LLP acted as legal advisors to Meritage Midstream and Riverstone, parent of Meritage Midstream Services III, LP.

KKR & Co. Inc. (NYSE:KKR) and SemGroup Corporation (NYSE:SEMG) completed the acquisition of Meritage Midstream ULC for approximately CAD 650 million on February 25, 2019. The purchase price was paid in cash on a debt-free basis and is subject to customary post-closing adjustments. The purchase price included CAD 152.3 million in reimbursements for estimated capital expenditures incurred from September 1, 2018 to the closing of the transaction. KKR & Co. Inc. and SemGroup Corporation entered into a credit agreement, together with The Toronto-Dominion Bank, as administrative agent, providing for a CAD 350 million senior secured term loan facility and a CAD 450 million senior secured revolving credit facility to fund a portion of the cash purchase price.