Notable Mergers and Acquisitions 9/9: (NEP) (ALN) (LPTN) (EPD)/(WMB)

September 9, 2016 9:39 AM EDT

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*** NextEra Energy Partners, LP (NYSE: NEP) announced that it has entered into an agreement with a subsidiary of its sponsor, NextEra Energy Resources, LLC, to acquire an indirect 24 percent interest in Desert Sunlight Investment Holdings, LLC. When completed, the acquisition will expand NextEra Energy Partners' portfolio of contracted renewable energy projects to approximately 2,788 megawatts (MW).1

"This acquisition further demonstrates our ability to acquire assets at attractive yields that will be accretive for our investors, as well as the continued strength of the pipeline of growth opportunities that our sponsor, NextEra Energy Resources, provides," said Jim Robo, chairman and chief executive officer. "In addition, NextEra Energy Partners' continued ability to access the equity markets aligns with our previously communicated flexible and opportunistic approach to advance our growth strategy and deliver unitholder distributions consistent with the expectations we've outlined. NextEra Energy Partners, in our view, remains the premier YieldCo in the space."

Desert Sunlight Investment Holdings, LLC owns two project entities, which together make up the Desert Sunlight Solar Energy Center, a 550-MW solar generation plant located in Riverside County, Calif. The high-quality solar energy center consists of 8 million panels capable of generating enough power for 160,000 homes. The projects are fully contracted under long-term power purchase agreements with strong creditworthy counterparties and remaining average contract lives of 21 years. NextEra Energy Resources, which currently owns 50 percent of the projects, will remain the managing member upon completion of the transaction.

NextEra Energy Partners expects to complete the acquisition in the fourth quarter of 2016, subject to the satisfaction of customary closing conditions, for a purchase price of $218 million. The purchase price considers approximately $258 million of the existing non-recourse project debt and is subject to working capital adjustments. The partnership expects to fund the transaction through the net proceeds of an issuance of common units.

NextEra Energy Partners expects the acquisition to contribute adjusted EBITDA of approximately $43 million to $53 million and cash available for distribution (CAFD) of approximately $21 million to $26 million, each on an annual run-rate basis as of Dec. 31, 2016. The acquisition is expected to contribute to an increase in the third-quarter distribution to an annualized rate of $1.365 per common unit from a current annualized rate of $1.32 per common unit. The acquisition is also expected to increase NextEra Energy Partners estimated incremental debt capacity at the holding company to approximately $375 million to $475 million and support NextEra Energy Partners' current expectations of 12 to 15 percent per year growth in limited partner distributions through 2020 off a base of its fourth-quarter 2015 distribution per common unit at an annualized rate of $1.23. Following this acquisition, NextEra Energy Partners affirms its previously announced expectations of a $230 million to $290 million CAFD run rate for the NextEra Energy Partners portfolio as of year-end 2016, net of incentive distribution rights fees.

*** American Lorain Corporation (NYSE: ALN) announced that it is in discussions with Shengrong Environmental Protection Holding Company Limited ("Shengrong"), the indirect parent company of Hubei Shengrong Environmental Protection Energy-Saving and Technology Co. Ltd. ("Hubei Shengrong"), a registered company in China, regarding a potential transaction. Hubei Shengrong is a high-tech company engaged in the development, manufacturing and sales of environmental protection equipment with a focus on recycling industrial solid waste and mining tailings. The final terms of the potential transaction are subject to ongoing negotiations between the parties.

Mr. Chen commented, "We are pleased to be in discussions with Shengrong, as this potential transaction would boost the company's positioning in the growing environmental protection industry and should help build investors' confidence in our company."

Ms. Jiazhen Li, the Chairwoman of Shengrong, commented, "This potential transaction with American Lorain would be an important milestone for Shengrong's global expansion plan. We believe that with more public exposure, we will be able to raise more public awareness about industrial waste treatment and better serve the global environmental protection mission."

ALN's board of directors (the "Board"), with the unanimous agreement of all directors, formed a special committee of the Board consisting exclusively of independent directors, to evaluate the potential transaction and negotiate any agreements relating to such transaction. The Board has granted the special committee the exclusive authority to consider, review, evaluate and actively negotiate the terms and conditions of such transaction on behalf of the Company. The special committee is composed of Hongxiang Yu, Dekai Yin and Maoquan Wei, the Company's independent directors. Mr. Yu serves as chair of the special committee.

The potential transaction is subject to due diligence investigations by the relevant parties, the negotiation and execution of definitive agreements and the satisfaction of agreed upon closing conditions. There can be no assurance that such transaction will be consummated.

*** Lpath, Inc. (Nasdaq: LPTN) and Apollo Endosurgery, Inc. announced that they have entered into a definitive merger agreement under which the security holders of Apollo would become the majority owners of Lpath. Under terms of the agreement, Lpath will issue new shares of its common stock or rights to acquire its common stock to Apollo security holders. The Apollo security holders are expected to own approximately 95.8 percent of the combined company and the Lpath security holders are expected to own approximately 4.2 percent of the combined company, subject to adjustments as described in the merger agreement.

Concurrent with the closing of the merger, Apollo's major investors have committed to invest approximately $29 million of new equity in the combined company, which will form part of the Apollo 95.8 percent ownership. The major investors include affiliates of PTV Healthcare Capital, H.I.G. BioHealth Partners, Remeditex Ventures, Novo A/S, and CPMG Inc. As of June 30, 2016 Apollo's cash was approximately $11.6 million and long term debt was approximately $50 million. Apollo's consolidated revenue for the calendar year ended December 31, 2015 was approximately $68 million.

The boards of directors of both Lpath and Apollo have unanimously approved the transaction, which is subject to customary closing conditions, including approval by the stockholders of each of Lpath and Apollo. The merger agreement contains certain termination rights for both Lpath and Apollo.

The transaction is expected to close during the fourth quarter of 2016. Upon closing of the transaction Lpath will be renamed Apollo Endosurgery, Inc. and the combined company intends to apply for listing on The NASDAQ Global Market under a new trading symbol.

Todd Newton, chief executive officer of Apollo, said, "Executing this transaction with Lpath is an expedient way to introduce our company to the public market. With the additional equity support we will receive from Apollo's major investors as part of this transaction, we will have the resources to meet our near-term business needs."

Gary Atkinson, Lpath's chief executive officer added, "Following an extensive and thorough review of strategic alternatives, we have chosen to merge with Apollo because we believe the transaction provides Lpath stockholders with an attractive opportunity for value appreciation."

Piper Jaffray & Co. is the exclusive financial advisor for Apollo in this transaction and Cooley LLP is Apollo's legal counsel. Lpath's exclusive financial advisor in the transaction is Torreya Partners LLC and Lpath's legal counsel is Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP.

Management and Organization

The directors and executive officers of Lpath will resign from their positions with Lpath upon the closing of the proposed merger, and the combined company will be under the leadership of Apollo's Newton and its current executive management team. Following the closing of the proposed merger, the Board of Directors of the combined company is expected to consist of nine members all of whom will be designated by Apollo, including representatives of each of Apollo's five major investors. Chairman of the Board of the combined company will be Richard J. Meelia, former Chairman and Chief Executive Officer of Covidien Ltd. The corporate headquarters will be located in Austin, TX.

*** Enterprise Products Partners L.P. (NYSE: EPD) generally does not comment on market rumors or speculation. However, due to recent news leaks, movements in the price of the partnership’s common units as well as questions from investors, Enterprise announced that it has withdrawn its indication of interest in The Williams Companies, Inc. (NYSE: WMB) regarding the possible combination of Enterprise and Williams.

“Since our initial public offering in 1998, we have been and remain focused on responsibly growing Enterprise to provide distribution growth for our partners and enhance the value of our partnership’s units,” stated A.J. “Jim” Teague, chief executive officer of Enterprise’s general partner. “Consistent with these efforts and after extensive analysis of public information regarding Williams, we submitted non-binding proposals to Williams to combine Williams and Enterprise. As a result of rumors with respect to our proposals, as well as the lack of engagement by Williams, we have determined that there is no actionable path forward toward an agreement. We, therefore, have withdrawn our non-binding proposals. While we are disappointed, we will maintain our financial discipline as we pursue future growth opportunities for the partnership.”

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