10-K: EnLink Midstream Details Securities and Governance Structure in 10-K Filing

EnLink Midstream's 10-K filing provides a detailed overview of its securities, operating agreement, and corporate governance policies as of December 31, 2023.

Summary

• EnLink Midstream, LLC (ENLC) has two classes of securities registered under Section 12 of the Securities Exchange Act of 1934: common units and 5.375% senior unsecured notes due 2029.
• Common unitholders are entitled to cash distributions and rights and privileges under the Second Amended and Restated Operating Agreement.
• Equiniti Trust Company, LLC serves as the registrar and transfer agent for the common units.
• The company was organized on October 16, 2013, and has a perpetual existence unless terminated.
• The purpose of the company is any business activity approved by the managing member, which may include owning, operating, developing, and acquiring crude oil and natural gas gathering and processing assets.
• Unitholders are not obligated to make additional capital contributions.
• Amendments to the operating agreement may be proposed only by the managing member and generally require a unit majority approval.
• A merger, consolidation, or conversion of ENLC requires the prior consent of the managing member.
• The company will dissolve upon the election by the managing member, there being no members other than the managing member, the entry of a decree of judicial dissolution, or the withdrawal or removal of the managing member.
• The managing member may withdraw by providing 90 days written notice.
• The managing member may transfer its interest without unitholder approval, provided the transferee assumes the rights and duties of the managing member.
• The operating agreement contains provisions to discourage changes in management, including loss of voting rights for those acquiring 20% or more of any class of units.
• The managing member has a call right to acquire all membership interests held by unaffiliated persons if it and its affiliates own more than 90% of the outstanding membership interests.
• The company intends to pay distributions to holders of common units on a quarterly basis from available cash, less reserves.
• The company issued $500 million in aggregate principal amount of 5.375% senior unsecured notes due 2029.
• The notes are general unsecured, senior obligations of ENLC, ranking equally with all other existing and future unsecured and unsubordinated indebtedness of ENLC.
• The notes are redeemable at any time at the company's option at the applicable redemption price.
• The notes are guaranteed by ENLK, and the guarantee may be released under certain circumstances.
• ENLC will not permit any of its Principal Subsidiaries to create, assume, incur or suffer to exist any mortgage, lien, security interest, pledge, charge or other encumbrance (liens) upon any Principal Property or upon any capital stock of any Principal Subsidiary, whether owned on the date of the supplemental indenture creating the notes or thereafter acquired, to secure any Indebtedness of ENLC or any other Person (other than the notes), without in any such case making effective provisions whereby all of the outstanding notes are secured equally and ratably with, or prior to, such Indebtedness so long as such Indebtedness is so secured.
• ENLC shall not consolidate with or merge into any Person or sell, lease, convey, transfer, or otherwise dispose of all or substantially all of its assets to any Person unless the successor is ENLC or expressly assumes all of ENLCs obligations and liabilities under the indenture and the notes.
• The indenture will be discharged when all outstanding notes have been delivered to the Trustee for cancellation or have become due and payable and we have irrevocably deposited with the Trustee as trust funds cash, certain U.S. government obligations or a combination thereof, in such amounts as will be sufficient, to pay the entire indebtedness of the notes not delivered to the Trustee for cancellation, for principal, premium, if any, and accrued interest to the stated maturity or redemption date.
• The indenture and the notes are governed by the laws of the State of New York.
• The notes are represented by one or more fully registered global notes deposited with DTC and registered in the name of Cede & Co.

Sentiment

Score: 6

Explanation: The document is primarily descriptive and factual, with a neutral tone. It outlines the legal and structural aspects of the company, without expressing strong positive or negative sentiments.

Positives

• The company has a perpetual existence unless terminated.
• The managing member is authorized to perform all acts it determines to be necessary or appropriate to carry out the purposes of, and to conduct, our business.
• The company intends to pay distributions to holders of common units on a quarterly basis from available cash, less reserves.
• The notes are general unsecured, senior obligations of ENLC, ranking equally with all other existing and future unsecured and unsubordinated indebtedness of ENLC.
• The company may at any time and from time to time repurchase notes in the open market or otherwise, in each case without any restriction under the indenture.

Negatives

• Unitholders are not obligated to make additional capital contributions, except as described under Limited Liability.
• If any person or group other than our managing member and its affiliates acquires beneficial ownership of 20% or more of any class of units, that person or group loses voting rights on all of its units.
• Our managing member may withdraw as managing member without first obtaining approval of our unitholders by giving 90 days written notice.
• The notes and each guarantee will effectively rank junior to any future indebtedness of ENLC or any Subsidiary Guarantor that is both secured and unsubordinated to the extent of the value of the assets securing such indebtedness, and the notes structurally rank junior to all indebtedness and other liabilities of ENLCs existing and future Subsidiaries that are not Subsidiary Guarantors.

Risks

• If, after the distribution, all liabilities of the limited liability company would exceed the fair value of the assets of the limited liability company, a limited liability company may not make a distribution to a member.
• As a result of our managing members right to purchase outstanding membership interests, a holder of membership interests may have his membership interests purchased at an undesirable time or at a price that may be lower than market prices at various times prior to such purchase or lower than a unitholder may anticipate the market price to be in the future.
• Our operating agreement contains specific provisions that are intended to discourage a person or group from attempting to remove our managing member or from otherwise changing our management.
• The indenture does not contain any provisions that would require ENLC to repurchase or redeem or otherwise modify the terms of the notes upon a change in control or other events involving ENLC that could adversely affect the creditworthiness of ENLC.

Future Outlook

The document does not contain a specific future outlook.

Industry Context

This document provides insight into the legal and structural framework of a midstream energy company, which is essential for understanding its operations and risk profile within the broader energy industry.

Comparison to Industry Standards

• The document does not contain specific comparisons to industry standards.
• However, the terms and conditions outlined in the operating agreement and indenture are typical for companies in the midstream energy sector.
• Comparable companies include MPLX, ONEOK, and Targa Resources Corp.

Stakeholder Impact

• The document outlines the rights and obligations of unitholders, providing clarity on their entitlements and limitations.
• The information on debt securities impacts creditors, outlining the terms and conditions of the notes.
• The details on management and governance structures affect employees, providing insight into leadership and decision-making processes.

Key Dates

Keywords

common units, operating agreement, managing member, securities, indenture, notes, ENLC, ENLK, transfer, member