Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
 
 
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of earliest event reported): February 14, 2019
 

WESTERN GAS PARTNERS, LP
(Exact name of registrant as specified in its charter)

 
Delaware
(State or Other Jurisdiction
of Incorporation)
001-34046
(Commission File Number)
26-1075808
(IRS Employer
Identification No.)
 
 
 
1201 Lake Robbins Drive
The Woodlands, Texas 77380-1046
(Address of principal executive office) (Zip Code)
 
 
 
(832) 636-6000
(Registrant’s telephone number, including area code)

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
þ  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
þ  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).    Emerging growth company   ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ¨



1

Item 8.01 Other Events.

On January 28, 2019, we filed with the Securities and Exchange Commission (the “SEC”) a definitive proxy statement/prospectus (the "Proxy Statement") with respect to the special meeting of unitholders of Western Gas Partners, LP (“WES”) to be held on February 27, 2019 at 8:00 a.m., local time, at which our unitholders will be asked to, among other things, vote on a proposal (i) to approve the Contribution Agreement and Agreement and Plan of Merger, dated as of November 7, 2018 (as it may be amended from time to time, the "Merger Agreement"), by and among Anadarko Petroleum Corporation, Anadarko E&P Onshore LLC, Western Gas Equity Partners, LP ("WGP"), Western Gas Equity Holdings, LLC, the general partner of WGP, WES, Western Gas Holdings LLC, our general partner, Clarity Merger Sub, LLC ("Merger Sub"), WGR Asset Holding Company LLC ("WGRAH"), WGR Operating, LP, Kerr-McGee Gathering LLC, Kerr-McGee Worldwide Corporation, APC Midstream Holdings, LLC, and Delaware Basin Midstream, LLC, a copy of which is included as Annex A to the Proxy Statement, and the transactions contemplated thereby, including the merger of Merger Sub with and into WES, with WES continuing as the surviving entity and a subsidiary of WGP (the "Merger"), and (ii) to approve the adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes to approve the Merger Agreement and the transactions contemplated thereby, including the Merger, at the time of the special meeting.
On January 28, 2019, a lawsuit captioned Lennes v. Western Gas Partners, LP, et al., Case No. 1:19-cv-00832 was commenced in the United States District Court for the Southern District of New York (the "Lennes Lawsuit"). On February 7, 2019, a putative class action lawsuit captioned Sabatini v. Western Gas Partners, LP, et al., Case No. 1:19-cv-00263 was commenced in the United States District Court for the District of Delaware (together with the Lennes Lawsuit, the “Lawsuits”). The Lawsuits claim that the Proxy Statement fails to disclose certain material information related to the Merger, and seek to enjoin the unitholder vote until such time as additional disclosures are made.
We believe that all allegations in the Lawsuits are without merit. However, we wish to make certain supplemental disclosures relating to the Merger solely for the purpose of mooting the allegations contained in the Lawsuits and avoiding the expense and burden of litigation. Nothing in the supplemental disclosures set forth in this current report shall be deemed an admission of materiality under applicable law of any of the supplemental disclosures.
Important information concerning the Merger and the transactions contemplated by the Merger Agreement is set forth in the Proxy Statement. The Proxy Statement is amended and supplemented by, and should be read as part of, and in conjunction with, the information set forth in this Current Report on Form 8-K.

SUPPLEMENT TO PROXY STATEMENT
We have agreed to make the following amended and supplemental disclosures to the Proxy Statement, which should be read in conjunction with the Proxy Statement. Capitalized terms used but not defined herein have the meanings set forth in the Proxy Statement. Without admitting in any way that the disclosures below are material, we make the following amended and supplemental disclosures:
1.
The following supplemental disclosure restates in its entirety the last paragraph on page 42 of the Proxy Statement:
On October 24, 2018, an updated Project Clarity Forecast Model was made available to the Special Committees and their respective advisors through the virtual data room. This forecast updated the forecasts provided on October 16, 2018 by correcting an immaterial error in calculation of the pro forma number of units outstanding post-merger. There was no change to the forecasted Adjusted EBITDA, Distributable Cash Flow or cash available for distribution (as applicable). Select unaudited forecasted financial information from the Project Clarity Forecast Model is provided on pages 66-67.


2

2.
The following supplemental disclosure restates in its entirety the second paragraph under the subheading “Dividend Discount Model Analysis—WES” on page 54:
Lazard based its dividend discount model analysis for WES on an assumed equity discount rate ranging from 9.0% to 11.0%. Lazard chose this range for this analysis based on its professional judgment and experience taking into account certain metrics including yields for U.S. treasury bonds, levered and unlevered betas for the WES comparable companies (as set forth below), and the market risk premium. Lazard also calculated estimated terminal values for WES by applying terminal multiples ranging from 8.25x to 10.25x to WES’s estimated terminal DCF, which was projected using a growth rate derived from the WES Projections. Lazard chose this range for this analysis based on its analysis of the relevant metrics for the WES comparable companies (as set forth below), as well as its professional judgment and experience.

3.
The disclosure in the list of comparable companies under the subheading “Selected Comparable Company Multiples Analysis—WES” on page 55 is hereby amended and supplemented by adding the trading multiples utilized by Lazard for each of the companies listed:
 
Price/DCF/Unit
 
Enterprise Value / EBITDA
 
2019E
2020E
 
2019E
2020E
“E&P-Sponsored WES Comparable Companies”
 
 
 
 
 
EnLink Midstream Partners, LP
8.7x
8.4x
 
10.9x
10.1x
EQT Midstream Partners, LP
8.7x
6.9x
 
8.0x
6.1x
Antero Midstream Partners LP
11.5x
9.6x
 
10.3x
8.2x
Noble Midstream Partners LP
9.3x
8.3x
 
12.0x
9.7x
CNX Midstream Partners LP
8.5x
7.5x
 
10.1x
8.2x
Hess Midstream Partners LP
11.4x
9.8x
 
10.7x
8.3x
Oasis Midstream Partners LP
8.2x
7.3x
 
10.0x
8.5x
“Other WES Comparable Companies”
 
 
 
 
 
DCP Midstream Partners LP
9.2x
9.1x
 
11.4x
10.8x
Enable Midstream Partners, LP
8.8x
8.5x
 
10.0x
9.6x
Crestwood Equity Partners LP
8.5x
7.2x
 
9.6x
8.6x


3

4.
The disclosure in the list of precedent transactions under the subheading “Selected Precedent Transactions Analysis—WES” on page 56 is hereby amended and supplemented by adding the trading multiples utilized by Lazard for each of the transactions listed:
Selected Precedent Transactions Analysis—WES
 
 
 
 
 
Acquiror
 
Target
 
Current Year P/DCF
EnLink Midstream LLC
  
EnLink Midstream Partners, L.P.
 
10.1x
Valero Energy Corporation
  
Valero Energy Partners LP
 
11.9x
Antero Midstream GP LP
  
Antero Midstream Partners LP
 
13.5x
Dominion Energy Inc.
  
Dominion Energy Midstream Partners LP
 
10.8x
Energy Transfer Equity, L.P.
  
Energy Transfer Partners LP
 
8.6x
Cheniere Energy, Inc.
  
Cheniere Energy Partners LP Holdings, LLC
 
13.6x
Enbridge Inc.
  
Enbridge Energy Partners, L.P. Class A
 
7.5x
Enbridge Inc.
  
Spectra Energy Partners, LP
 
10.5x
The Williams Companies, Inc.
  
Williams Partners L.P.
 
12.7x
Sunoco Logistics Partners L.P.
  
Energy Transfer Partners, L.P.
 
8.2x
EQT Midstream Partners LP
  
Rice Midstream Partners LP
 
10.3x
Tallgrass Energy LP Class A
  
Tallgrass Energy Partners, LP
 
9.0x
Archrock, Inc.
  
Archrock Partners, L.P.
 
5.9x
Zenith Energy L.P.
  
Arc Logistics Partners LP
 
7.9x
Andeavor Logistics LP
  
Western Refining Logistics, LP
 
13.3x
Energy Transfer Partners, L.P.
  
PennTex Midstream Partners, LP
 
7.9x
VTTI B.V.
  
VTTI Energy Partners LP
 
13.8x
World Point Terminals, Inc.
  
World Point Terminals, LP
 
10.7x
ONEOK, Inc.
  
ONEOK Partners, L.P.
 
15.0x
Enbridge, Inc.
  
Midcoast Energy Partners LP Class A
 
15.1x
American Midstream Partners, LP
  
JP Energy Partners LP
 
6.6x
TransCanada Corporation
  
Columbia Pipeline Partners LP
 
17.3x
SemGroup Corporation
  
Rose Rock Midstream, L.P.
 
9.5x

5.
The following supplemental disclosure restates in its entirety the second paragraph under the subheading “Dividend Discount Model Analysis—WGP” on page 57:
Lazard based its dividend discount model analysis for WGP on an assumed equity discount rate ranging from 9.0% to 11.0%. Lazard chose this range for this analysis based on its professional judgment and experience taking into account certain metrics including yields for U.S. treasury bonds, levered and unlevered betas for the WGP Comparable Companies (as defined below), and the market risk premium. Lazard also calculated estimated terminal values for WGP by applying terminal multiples ranging from 10.00x to 12.00x to WGP’s estimated terminal DCF, which was projected using a growth rate derived from the WGP Projections. Lazard chose this range for this analysis based on its analysis of the relevant metrics for the WGP Comparable Companies (as defined below), as well as its professional judgment and experience.

4

6.
The disclosure in the list of comparable companies under the subheading “Selected Comparable Company Multiples Analysis—WGP” on page 57 is hereby amended and supplemented by adding the trading multiples utilized by Lazard for each of the companies listed:
 
Price/DCF/Unit
“WGP Comparable Companies”
2019E
2020E
Energy Transfer Equity, L.P.
11.0x
10.1x
EQT GP Holdings, LP
10.6x
9.0x
EnLink Midstream, LLC
9.5x
9.2x
Antero Midstream GP LP
17.6x
11.8x

7.
The disclosure in the list of comparable companies under the subheading “Selected Comparable Company Multiples Analysis—Dropdown Assets” on page 59 is hereby amended and supplemented by adding the trading multiples utilized by Lazard for each of the companies listed:
 
Enterprise Value / EBITDA
“G&P Asset Dropdown Comparable Companies”
2019E
2020E
EnLink Midstream Partners, LP
10.9x
10.1x
EQT Midstream Partners, LP
8.0x
6.1x
Antero Midstream Partners LP
10.3x
8.2x
Noble Midstream Partners LP
12.0x
9.7x
CNX Midstream Partners LP
10.1x
8.2x
Hess Midstream Partners LP
10.7x
8.3x
Oasis Midstream Partners LP
10.0x
8.5x
DCP Midstream Partners LP
11.4x
10.8x
Enable Midstream Partners, LP
10.0x
9.6x
Crestwood Equity Partners LP
9.6x
8.6x
 
 
 
“Pipeline Joint Venture Asset Dropdown Comparable Companies”
 
 
Enterprise Products Partners LP
12.1x
11.7x
Kinder Morgan, Inc.
9.8x
9.3x
MPLX LP
11.0x
10.4x
Plains All American Pipeline
10.6x
10.1x
Magellan Midstream Partners
12.6x
11.3x
Tallgrass Energy, LP
9.8x
10.3x


5

8.
The disclosure in the table under the subheading “Selected Precedent Transaction Analysis—Dropdown Assets” on pages 60-61 is hereby amended and supplemented by adding the trading multiples utilized by Lazard for each of the transactions listed:
“G&P Transactions”
 
 
 
 
Acquiror
 
Target
 
EBITDA Multiple
Enable Midstream Partners, LP
  
Velocity Holdings Inc
 
13.0x
EagleClaw Midstream Ventures, LLC
  
Caprock Midstream Holdings
 
9.6x
Silver Creek Midstream, LLC
  
Powder River Basin midstream assets from Genesis Energy, L.P.
 
15.0x
The Williams Companies, Inc. and KKR & Co.
  
Discovery DJ Services
 
14.2x
Harvest Midstream Company
  
Four Corners Area Assets from The Williams Companies, Inc.
 
13.7x
Global Infrastructure Partners LP
  
EnLink Midstream Partners, LP and EnLink Midstream LLC
 
11.2x
Arclight Capital Partners, LLC
  
Midcoast Operating, L.P.
 
8.0x
EQT Midstream Partners, LP
  
Olympus gathering system and Strike Force gathering system from EQT Corporation and Gulfport Energy Corporation respectively
 
10.0x
Morgan Stanley Infrastructure Partners LP
  
Brazos Midstream Holdings, LLC
 
15.0x
OPTrust & Partners Group AG
  
Superior Pipeline Company LLC
 
12.0x
CNX Midstream Partners LP
  
Marcellus gathering and production system from CNX Resources Corp
 
11.5x
Riverstone Holdings LLC and Goldman Sachs Group Inc.
  
Lucid Energy Group II, LLC
 
10.5x
Noble Energy, Inc. and Greenfield Midstream
  
Saddle Butte Rockies Midstream
 
13.0x
I Squared Capital
  
Pinnacle Midstream, LLC
 
NA
Global Infrastructure Partners LP
  
Medallion Gathering & Processing LLC
 
15.9x
Enable Midstream Partners, LP
  
Align Midstream Partners II LP
 
10.0x
Blackstone Energy Partners
  
EagleClaw Midstream Ventures, LLC
 
17.9x
NuStar Energy L.P.
  
Navigator Energy Services, LLC
 
20.4x
Plains All American, L.P.
  
Alpha Crude Connector from Concho Resources Inc. and Frontier Midstream Solutions, LLC
 
17.5x
Targa Resources Partners LP
  
Outrigger Delaware Operating, LLC; Outrigger Southern Delaware Operating, LLC; and Outrigger Midland Operating, LLC
 
9.0x
Rice Midstream Partners LP
  
Marcellus gathering and compression assets from Rice Energy Inc.
 
13.5x
DTE Energy Co.
  
Gas gathering systems from M3 Midstream LLC and Vega Energy Partners Ltd.
 
10.5x
ARB Midstream, LLC
  
Platte River gathering system from Rimrock Midstream Holdings, LLC
 
NA
Enlink Midstream, LLC and EnLink Midstream Partners, LP
  
Tall Oak Midstream, LLC
 
19.4x
Global Infrastructure Partners LP
  
Bakken midstream assets from Hess Corporation
 
18.1x
Enterprise Products Partners LP
  
EFS Midstream LLC
 
12.0x
Howard Midstream Energy Partners, LLC
  
Pennsylvania natural gas gathering assets from Southwestern Energy Company
 
10.5x
EQT Midstream Partners, LP
  
West Virginia Marcellus gathering system from EQT Corporation
 
10.6x
Western Gas Partners, LP
  
Interest in Delaware Basin gathering system from Anadarko Petroleum Corporation
 
8.8x

6

EnLink Midstream Partners, LP
  
EnLink Midstream Holdings, LP
 
9.0x
EnLink Midstream Partners, LP
  
Coronado Midstream, LLC
 
16.0x
Western Gas Partners, LP
  
Nuevo Midstream, LLC
 
8.5x

9.
The disclosure in the table under the subheading “Selected Precedent Transaction Analysis—Dropdown Assets” on pages 61-62 is hereby amended and supplemented by adding the trading multiples utilized by Lazard for each of the transactions listed:
“Pipeline JV Transactions”
 
 
 
 
Acquiror
 
Target
 
EBITDA Multiple
Ontario Municipal Employees Retirement System
  
BridgeTex Pipeline Company LLC
 
12.0x
Alinda Capital Partners LLC
  
Maurepas Pipeline LLC
 
13.0x
Lotus Midstream LLC and Moda Midstream LLC
  
Ingleside Energy Center and Centurion pipeline system from Occidental Petroleum Corp.
 
14.4x
ONEOK, Inc.
  
West Texas LPG Pipeline Limited Partnership
 
14.0x
Andeavor
  
Rangeland Energy II, LLC
 
9.0x
BlackRock Inc.
  
Glass Mountain Pipeline, LLC
 
15.0x
Blackstone Energy Partners
  
Grand Prix Pipeline from Targa Resources Corp.
 
10.0x
Holly Energy Partners, L.P.
  
SLC Pipeline and Frontier Aspen Pipeline from Plains All American, L.P.
 
10.9x
MPLX LP
  
Ozark Crude Oil Pipeline from Enbridge Inc.
 
8.0x
Valero Energy Partners LP
  
Red River pipeline from Plains All American Pipeline, L.P.
 
8.5x
Sunoco Logistics Partners LP
  
Permian Basin crude oil system from Vitol Group
 
13.8x
Phillips 66 Partners LP
  
Natural gas liquids logistics system from Chevron Corp.
 
10.0x
Shell Midstream Partners, L.P.
  
Zydeco Pipeline Company LLC; Bengal Pipeline Company LLC; Colonial Pipeline Company
 
8.8x
Tallgrass Energy Partners, LP
  
Tallgrass Pony Express Pipeline, LLC
 
9.0x
Western Refining Logistics, LP
  
Pipeline assets located in Texas and New Mexico from Western Refining, Inc.
 
9.6x
Shell Midstream Partners, L.P.
  
Poseidon Oil Pipeline Company LLC
 
9.5x
Shell Midstream Partners, L.P.
  
Zydeco Pipeline Company LLC and Colonial Pipeline Company
 
10.0x
EnLink Midstream Partners, LP
  
Victoria Express Pipeline and related assets from Devon Energy Corporation
 
10.0x
Phillips 66 Partners LP
  
Sand Hills and Southern Hills natural gas liquids pipeline systems and Explorer refined products pipeline system from Phillips 66
 
9.5x
Rose Rock Midstream, L.P.
  
Wattenberg Oil Trunkline System and Glass Mountain Pipeline from SemGroup Corporation
 
11.0x
Kinder Morgan, Inc.
  
Hiland Partners
 
16.0x
MPLX LP
  
Pipeline and storage facility assets from Marathon Petroleum Corporation
 
10.0x
Plains All American Pipeline, L.P.
  
BridgeTex Pipeline Company
 
10.5x
Enbridge Energy Partners L.P.
  
Alberta Clipper Pipeline from Enbridge, Inc.
 
11.0x
Tallgrass Energy Partners, LP
  
Tallgrass Pony Express Pipeline, LLC
 
9.0x

7

Rose Rock Midstream, L.P.
  
White Cliffs Pipeline from SemGroup Corporation
 
12.9x
Martin Midstream Partners L.P.
  
West Texas LPG Pipeline L.P.
 
13.5x

10.
The table appearing on pages 66-67 under the heading “Unaudited Forecasted Financial Information of Status Quo WES” and footnotes thereto are amended and restated as follows:

$ in millions, except per unit amounts
2018E
2019E
2020E
2021E
Net Revenues1
$
1,571

$
2,028

$
2,228

$
2,312

 
 
 
 
 
Operating Expenses
 
 
 
 
Operation and Maintenance
$
424

$
575

$
591

$
581

Cash General and Administrative
$
50

$
62

$
64

$
66

Property and Other Taxes
$
46

$
54

$
57

$
57

Total Operating Expenses
$
520

$
690

$
712

$
705

 
 
 
 
 
Equity Investment Distributions
$
161

$
191

$
238

$
243

Non-Controlling Interest Adjustment2
$
(13
)
$
(13
)
$
(14
)
$
(12
)
Contingency
$
—

$
(39
)
$
(45
)
$
(48
)
Adjusted EBITDA3
$
1,200

$
1,476

$
1,694

$
1,791

Cash Interest Expense
$
(191
)
$
(257
)
$
(284
)
$
(309
)
Maintenance Capital Expenditures
$
(88
)
$
(82
)
$
(93
)
$
(90
)
Above-Market Component of Swaps
$
54

$
—

$
—

$
—

Recognized Service Revenues Adjustment
$
—

$
5

$
5

$
8

Other4
$
3

$
(3
)
$
(4
)
$
(4
)
Distributable Cash Flow5
$
978

$
1,140

$
1,319

$
1,396

Distributable Cash Flow attributable to each limited partner unit
$
3.79

$
4.28

$
4.83

$
5.06

Notes:
 
1. Net Revenues is calculated by subtracting cost of product from revenues.
2. Represents the adjustment for the 25% interest in Chipeta Processing LLC not owned by WES.
3. Adjusted EBITDA is defined as revenues less cost of product, operation and maintenance expense, cash general and administrative expense, property and other taxes, plus distributions from equity investments, and less adjustments for the non-controlling interest associated with the Chipeta complex. For years 2019 and thereafter, management also applied a 2.5% downward contingency to the original projections of Adjusted EBITDA (prior to the subtraction of cash general and administrative expenses) to account for its views as to uncertainty in future year projections.
4. Represents state margin tax cash payments.
5. Distributable cash flow is defined as Adjusted EBITDA, plus the net settlement amounts from the sale and/or purchase of natural gas, condensate and NGLs under WES’s commodity price swap agreements to the extent such amounts are not recognized as Adjusted EBITDA, less Service revenues - fee based recognized in Adjusted EBITDA (less than) in excess of customer billings, net cash paid (or to be paid) for interest expense, maintenance capital expenditures, and income taxes.


8

11.
The table appearing on page 67 under the heading “Unaudited Forecasted Financial Information of Status Quo WGP” and footnotes thereto are amended and restated as follows:

$ in millions, except per unit amounts
 
2018E
2019E
2020E
2021E
WES Adjusted EBITDA
$
1,200

$
1,476

$
1,694

$
1,791

Cash General and Administrative Expense
$
3

$
3

$
3

$
3

WGP Adjusted EBITDA1
$
1,197

$
1,473

$
1,691

$
1,788

 
 
 
 
 

Distributions from WES
$
519

$
568

$
655

$
707

Cash General and Administrative Expense
$
3

$
3

$
3

$
3

Cash Interest Expense
$
1

$
1

$
1

$
1

Cash Available for Distribution2
$
515

$
563

$
651

$
703

Cash Available for Distribution per unit
$
2.36

$
2.57

$
2.97

$
3.21

Notes:
 
 
 
 
1. Adjusted EBITDA is defined as status quo WES Adjusted EBITDA described above, less cash paid for incremental general and administrative expense.
2. Cash available for distribution is defined as distributions received from WES, less cash paid for incremental general and administrative expense and interest expense.

12.
The table appearing on page 67 under the heading “Unaudited Forecasted Financial Information of the Assets Subject to the Contribution and Sale” and footnotes thereto are amended and restated as follows:
$ in millions, except per unit amounts
2018E
2019E
2020E
2021E
2022E
2023E
Net Revenues1
$
297

$
544

$
621

$
699

$
846

$
931

 
 
 
 
 
 
 
Operating Expenses
 
 
 
 
 
 
Operation and Maintenance
$
60

$
103

$
111

$
117

$
134

$
146

General and Administrative
$
40

$
40

$
41

$
43

$
44

$
46

Property and Other Taxes
$
9

$
10

$
12

$
12

$
13

$
14

Total Operating Expenses
$
109

$
154

$
164

$
172

$
191

$
206

 
 
 
 
 
 
 
Equity Investment Distributions
$
47

$
56

$
63

$
75

$
56

$
52

Contingency
$
—

$
(24
)
$
(28
)
$
(32
)
$
(38
)
$
(41
)
Adjusted EBITDA2
$
235

$
422

$
491

$
570

$
673

$
737

Notes:
1. Net Revenues is calculated by subtracting cost of product from revenues.
2. Adjusted EBITDA for the assets to be acquired through the Contribution and Sale is defined as revenues less cost of product, operation and maintenance expense, general and administrative expense, property and other taxes, plus distributions from equity investments. For years 2019 and thereafter, management also applied a 5.0% downward contingency to the original projections of Adjusted EBITDA to account for its views as to uncertainty in future year projections.


9

13.
The table appearing on page 67 under the heading “Unaudited Forecast Financial Information of Pro Forma WGP” and footnotes thereto are amended and restated as follows:
$ in millions, except per unit amounts
2019E
2020E
2021E
Net Revenues1
$
2,572

$
2,849

$
3,011

 
 
 
 
Operating Expenses
 
 
 
Operation and Maintenance
$
678

$
702

$
698

Cash General and Administrative
$
105

$
108

$
112

Property and Other Taxes
$
64

$
69

$
70

Total Operating Expenses
$
847

$
879

$
880

 
 
 
 
Equity Investment Distributions
$
247

$
301

$
319

Non-Controlling Interest Adjustment2
$
(13
)
$
(14
)
$
(12
)
Contingency
$
(64
)
$
(73
)
$
(80
)
Adjusted EBITDA3
$
1,896

$
2,184

$
2,358

Cash Interest Expense
$
(370
)
$
(407
)
$
(437
)
Maintenance Capital Expenditures
$
(115
)
$
(125
)
$
(120
)
Above-Market Component of Swaps
$
—

$
—

$
—

Recognized Service Revenues Adjustment
$
8

$
8

$
10

Other4
$
(3
)
$
(4
)
$
(4
)
Distributable Cash Flow Attributable to WES
$
1,416

$
1,655

$
1,806

Non-Controlling Interest Adjustment
$
(28
)
$
(33
)
$
(36
)
Distributable Cash Flow Attributable to WGP5
$
1,387

$
1,622

$
1,770

Distributable Cash Flow per unit
$
3.06

$
3.58

$
3.91

Notes:
1. Net Revenues is calculated by subtracting cost of product from revenues.
2. Represents the adjustment for the 25% interest in Chipeta Processing LLC not owned by WES.
3. Adjusted EBITDA is defined as revenues less cost of product, operation and maintenance expense, cash general and administrative expense, property and other taxes, plus distributions from equity investments, and less adjustments for the non-controlling interest associated with the Chipeta complex. Management also applied a 2.5% downward contingency to the original projections of Status Quo WES Adjusted EBITDA and a 5% downward contingency to the original projections of Adjusted EBITDA for the Assets Subject to the Contribution and Sale (prior to the subtraction of cash general and administrative expenses) to account for its views as to uncertainty in future year projections.
4. Represents state margin tax cash payments.
5. Distributable cash flow is defined as Adjusted EBITDA, plus the net settlement amounts from the sale and/or purchase of natural gas, condensate and NGLs under our commodity price swap agreements to the extent such amounts are not recognized as Adjusted EBITDA, less Service revenues -- fee based recognized in Adjusted EBITDA (less than) in excess of customer billings, net cash paid (or to be paid) for interest expense, maintenance capital expenditures, income taxes and WES distributions to WGRAH in connection with its 2.0% pro forma interest in WES.


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Important Information for Investors and Unitholders

This current report does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.

In connection with the Merger Agreement and the transactions contemplated thereby (the "Simplification Transaction"), WGP filed with the SEC a registration statement on Form S-4, which includes a prospectus of WGP and the Proxy Statement.  WES and WGP also plan to file other documents with the SEC regarding the proposed Simplification Transaction. WES mailed a definitive proxy statement/prospectus to the unitholders of WES on January 28, 2019. INVESTORS AND UNITHOLDERS OF WES ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER DOCUMENTS RELATING TO THE PROPOSED SIMPLIFICATION TRANSACTION THAT HAVE BEEN OR WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED SIMPLIFICATION TRANSACTION. Investors and unitholders of WES will be able to obtain free copies of the proxy statement/prospectus and other documents containing important information about WES and WGP from the SEC, through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by WES and WGP will be available free of charge on their internet website at www.westerngas.com or by contacting their Investor Relations Department at 832-636-6000. 

Participants in the Solicitation

WES, WGP, their respective general partners and their respective general partners' respective directors and certain of their executive officers may be deemed to be participants in the solicitation of proxies from the unitholders of WES in connection with the proposed Simplification Transaction. Information about the directors and executive officers of WES is set forth in WES's Annual Report on Form 10-K which was filed with the SEC on February 16, 2018. Information about the directors and executive officers of WGP is set forth in WGP's Annual Report on Form 10-K which was filed with the SEC on February 16, 2018. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, are contained in the proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available. Free copies of these documents can be obtained using the contact information above. 

Cautionary Statement Regarding Forward-Looking Statements

This current report contains forward-looking statements. For example, statements regarding future financial performance, future competitive positioning and business synergies, future acquisition cost savings, future market demand, future benefits to unitholders, future economic and industry conditions, the proposed Simplification Transaction (including its benefits, results, effects and timing) and whether and when the Simplification Transaction will be consummated, are forward-looking statements within the meaning of federal securities laws. WES, WGP and their respective general partners believe that their expectations are based on reasonable assumptions. No assurance, however, can be given that such expectations will prove to have been correct.

A number of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this current report. Such factors include, but are not limited to:  the failure of the unitholders of WES to approve the proposed Simplification Transaction; the risk that the conditions to the closing of the proposed Simplification Transaction are not satisfied; the risk that regulatory approvals required for the proposed Simplification Transaction are not obtained or are obtained subject to conditions that are not anticipated; potential adverse reactions or changes to business relationships resulting from the announcement or completion of the proposed Simplification Transaction; uncertainties as to the timing of the proposed Simplification Transaction; competitive responses to the proposed Simplification Transaction; the inability to obtain or delay in obtaining cost savings and synergies from the proposed Simplification Transaction; unexpected costs, charges or expenses resulting from the proposed Simplification Transaction; the outcome of pending or potential litigation, including the Lawsuits; the inability to retain key personnel; uncertainty of the expected financial performance of WGP following completion of the proposed Simplification Transaction; and any changes in general economic and/or industry specific conditions.


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WES and WGP caution that the foregoing list of factors is not exclusive. Additional information concerning these and other risk factors is contained in WES's and WGP's most recently filed Annual Reports on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other SEC filings, which are available at the SEC's website, http://www.sec.gov.  All subsequent written and oral forward-looking statements concerning WES, WGP, the proposed Simplification Transaction or other matters attributable to WES and WGP or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above.  Each forward-looking statement speaks only as of the date of the particular statement. Except as required by law, WES, WGP and their respective general partners undertake no obligation to publicly update or revise any forward-looking statements.

The information in this Item 8.01 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and is not incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.


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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
WESTERN GAS PARTNERS, LP
 
 
 
 
 
By:
Western Gas Holdings, LLC,
 
 
 
its general partner
 
 
 
Dated:
February 14, 2019
By:
/s/ Philip H. Peacock
 
 
 
Philip H. Peacock
Senior Vice President, General Counsel and
Corporate Secretary


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