The U.S. House of Representatives Financial Services Committee advanced another piece of legislation related to disclosures of environmental, social, and corporate governance (ESG) metrics on Wednesday, May 12, 2021. Introduced by Rep. Sean Casten, D-Ill., HR 2570, the Climate Risk Disclosure Act, cleared the committee with the full support of the majority members in a vote of 28 to 24. (more…)
Last week the U.S. House of Representatives advanced the first piece of legislation of the year regarding environmental, social, and governance (ESG). On Wednesday, April 21, the House Financial Services Committee passed H.R. 1187, the ESG Disclosure Simplification Act of 2021, by a party-line vote of 28-22.
As the recent significant decline in oil prices drives profit margins lower, oil and gas industry players continue to seek new ways to obtain capital to preserve liquidity and maintain growth programs. From drawing down revolving loans to keeping cash on the balance sheet to engaging in custom asset-focused carry structures, companies are examining—and executing on—a variety of diverse capitalization strategies. One such strategy that has emerged as a recent favorite for certain public companies is the issuance of preferred securities to handpicked private equity funds and similar investors in private placements exempt from the registration requirements of the Securities Act of 1933.
While non-energy public companies generally have familiarity with the basic terms of preferred issuances, fewer oil and gas companies do, largely as a result of their historical rarity in the energy space. However, with companies such as MPLX LP; NGL Energy Partners LP; American Midstream Partners, LP; Western Gas Partners, LP; Targa Resources Corp.; EnLink Midstream Partners, LP; Plains All American Pipeline, L.P., and Crestwood Equity Partners LP engaging in recent preferred issuances, such issuances have become an important tool in the oil and gas executive’s playbook.
This article briefly discusses the basic structure and terms of most private placements of preferred securities, with a focus on the most-negotiated commercial terms and their implications for the issuer and the investors.