Summit Midstream Corporation (NYSE: SMC) announced it will issue 1,351,351 shares of common stock to an affiliate of Tailwater Capital LLC for $42 million in a private placement transaction.

The Houston-based midstream energy company will sell the shares at $31.08 per share, matching the closing price on March 30. The transaction was approved by Summit's Audit Committee, comprised of independent directors.

"This $42 million investment represents a significant vote of confidence in our company's outlook and provides us with financial flexibility to execute on our current pipeline of high-return growth projects while continuing to make progress towards achieving our long-term 3.5x leverage target," said Heath Deneke, Summit's president and chief executive officer.

Summit plans to use proceeds to reduce borrowings under its asset-based lending credit facility and fund organic growth capital projects. The shares are subject to a six-month lockup period.

Following the transaction, Tailwater and its affiliated entities will own approximately 39% of Summit's outstanding equity. Jason Downie, co-founder and managing partner at Tailwater Capital, described his firm as Summit's largest shareholder.

Summit operates midstream energy infrastructure in five unconventional resource basins across the United States, including the Williston Basin in North Dakota and the Denver-Julesburg Basin in Colorado and Wyoming. The company provides natural gas, crude oil and produced water gathering, processing and transportation services.

Dallas-based Tailwater Capital has raised more than $6 billion in committed equity capital since inception and executed over 300 transactions representing more than $29 billion in value, according to the press release.