SCM Topco, parent of Salt Creek Midstream, closed on a recapitalization with additional investments from both its existing lender groups and funds managed by Ares Management. The recapitalization was consensual and approved by 100% of the lender group. The financial terms of the transaction were not disclosed.
“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,” John Poarch, president of Salt Creek Gas, said. “We are grateful to Salt Creek Gas’ investors and lenders for investing additional capital in the business and supporting it through this recapitalization process. 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.”
“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,” Zach Lee, CEO of ARM Midstream Management, said.
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.
“We are pleased to be supporting what we see as an attractive opportunity in the midstream industry,” Nate Walton, co-head of private equity group at Ares Management, said. “We believe this recapitalization positions Salt Creek Gas to execute on its business plan and create meaningful value over time.”
Jefferies Group acted as financial advisor, Kirkland & Ellis acted as legal advisor and Alvarez & Marsal acted as restructuring advisor for Salt Creek Gas. White & Case and Perella Weinberg Partners acted as legal advisor and financial advisor, respectively, to the first lien lenders. Akin Gump Strauss Hauer & Feld acted as legal counsel and Ducera Partners and Silver Foundry acted as financial advisors to the holdco facility lenders. Lazard and Guggenheim Securities served as financial advisors and Milbank served as legal advisor to Ares Management. Simpson Thacher & Bartlett served as legal advisor to ARM Midstream.
Salt Creek Gas is a privately-owned gas gatherer and processor in the Delaware Basin.