Transaction provides significant runway to meet growth objectives
Funds managed by Ares Management commit additional capital and maintain majority equity interest
HOUSTON–(BUSINESS WIRE)–SCM Topco, LLC, parent of Salt Creek Midstream, LLC, a full service natural gas gatherer and processor (“Salt Creek Gas”), today announced that it has closed on a comprehensive recapitalization with additional investments from both its existing lender groups and funds managed by Ares Management, a leading global alternative investment manager. The recapitalization was consensual and approved by 100% of the lender group. The financial terms of the transaction were not disclosed.
Since its inception, Salt Creek Gas has grown into one of the largest privately-owned gas gatherers and processors in the Delaware Basin. Its expansive pipeline footprint, large-scale gathering and processing facilities, and strategic downstream solutions position it to provide value-added gas gathering and processing services to Delaware Basin producers.
John Poarch, President of Salt Creek Gas, stated, “We believe this recapitalization is an important step in securing Salt Creek Gas’ long-term success and gives it the flexibility to continue to pursue its exciting growth plans in the Delaware Basin, which has been one of the most prolific energy plays in North America. We are grateful to Salt Creek Gas’ investors and lenders for investing additional capital in the business and supporting it through this recapitalization process.”
Poarch continued, “I am proud of the resiliency of the business and the team’s efforts to maintain excellent customer service, especially in light of current challenging industry conditions.”
Zach Lee, CEO of ARM Midstream Management, LLC (“ARM Midstream”) stated, “Over the past three years, Salt Creek Gas has evolved into one of the largest midstream assets in the Delaware Basin and, as a continuing equity holder, we are excited for the future of the company.”
The new capital structure is designed to provide Salt Creek Gas with increased financial flexibility, improved cash flow generation capacity, and the ability to seek to raise additional capital for growth projects and other funding needs.
Nate Walton, Co-Head of Private Equity Group at Ares Management, stated, “We are pleased to be supporting what we see as an attractive opportunity in the midstream industry. We believe this recapitalization positions Salt Creek Gas to execute on its business plan and create meaningful value over time.”
Jefferies Group LLC acted as financial advisor for Salt Creek Gas, Kirkland & Ellis LLP as its legal advisor, and Alvarez & Marsal Holdings, LLC, as its restructuring advisor. White & Case LLP and Perella Weinberg Partners, LP acted as legal advisor and financial advisor, respectively, to the first lien lenders. Akin Gump Strauss Hauer & Feld LLP, Ducera Partners LLC, and Silver Foundry, LP acted as legal counsel and financial advisors, respectively, to the holdco facility lenders. Lazard LLC and Guggenheim Securities, LLC and Milbank LLP served as financial advisors and legal advisor, respectively, to Ares Management. Simpson Thacher & Bartlett LLP served as legal advisor to ARM Midstream.
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About Salt Creek Gas
Formed in 2017, Salt Creek Gas is one of the largest privately-owned gas gatherers and processors in the Delaware Basin. It operates a 400-plus-mile, large diameter high-pressure pipeline network capable of transporting over 1.4 Bcf/d. Salt Creek Gas has 400 MMcf/d of cryogenic gas processing capacity and 405,000 dedicated acres of gas reserves under long-term agreements from 16 customers. Its vast pipeline footprint, large scale gathering and processing facilities, and strategic downstream solutions uniquely position Salt Creek Gas to provide premier gas gathering and processing services to the Delaware Basin. To learn more, visit www.saltcreekmidstream.com.
About Ares Management Corporation
Ares Management Corporation (NYSE: ARES) is a leading global alternative investment manager operating integrated businesses across Credit, Private Equity and Real Estate. Ares Management’s investment groups collaborate to deliver innovative investment solutions and consistent and attractive investment returns for fund investors throughout market cycles. Ares Management’s global platform had $149 billion in assets under management as of March 31, 2020 with more than 1,250 employees operating across North America, Europe, Asia and Australia. Please visit www.aresmgmt.com for additional information.
Headquartered in Houston, with offices in Calgary, Denver, and Midland, ARM Energy Holdings, LLC (“ARM”) is a premier producer services firm, active in every sector of the energy value chain across all major North American oil and gas basins. Its integrated, diversified portfolio includes Asset Risk Management, LLC, providing risk management and hedging strategies for producers; ARM Energy Management LLC, providing physical oil and gas marketing, transportation and asset management services and trading; and ARM Midstream, LLC, providing midstream investment, infrastructure development and operations. For more information, please visit www.armenergy.com.
Statements included herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which relate to future events or our future performance or financial condition. These statements are not guarantees of future performance, condition or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in our filings with the Securities and Exchange Commission. Ares Management Corporation undertakes no duty to update any forward-looking statements.
Salt Creek Midstream and ARM Energy
Sard Verbinnen & Co
Kelly Kimberly, +1 713 822 7538
Brett Philbin, +1 917 818 9511