SC 13D/A

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 13D/A

Under the Securities Exchange Act of 1934

(Amendment No. 5)*

 

 

DOMINION ENERGY MIDSTREAM PARTNERS, LP

(Name of Issuer)

Common Units Representing Limited Partner Interests

(Title of Class of Securities)

257454108

(CUSIP Number)

Carlos M. Brown

Dominion Energy, Inc.

120 Tredegar Street

Richmond, Virginia 23219

(804) 819-2000

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

September 19, 2018

(Date of event which requires filing of this statement)

 

 

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of § 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g) check the following box  ☐.

 

 

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

 

 

 

*

The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act.

 

 

 


  1   

Name of reporting persons

 

Dominion Energy, Inc.

 

I.R.S. identification nos. of above persons (entities only)

 

54-1229715

  2  

Check the appropriate box if a member of a group

(a): ☐

(b): ☐

 

  3  

SEC use only

 

  4  

Source of funds

 

OO

  5  

Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e)

 

  6  

Citizenship or place of organization

 

Virginia

Number of

Shares

Beneficially

Owned by

Each

Reporting

Person

with

 

     7    

Sole voting power

 

0

     8   

Shared voting power

 

77,152,4991

     9   

Sole dispositive power

 

0

   10   

Shared dispositive power

 

77,152,4991

11   

Aggregate amount beneficially owned by each reporting person

 

77,152,4991

12  

Check if the aggregate amount in row (11) excludes certain shares

 

13  

Percent of class represented by amount in row (11)

 

60.9%2

14  

Type of reporting person

 

CO

 

1.

Includes 43,820,578 common units representing limited partner interests (“Common Units”) in the Issuer held directly by Dominion MLP Holding Company, LLC (“Holdco”). Dominion Cove Point, Inc. (“Cove Point”) owns all of the membership interests in Holdco and Dominion Energy, Inc. (“Dominion”) owns all of the common stock of Cove Point. Accordingly, Dominion may be deemed to indirectly beneficially own the Common Units directly held by Holdco.

Includes 26,675,082 Common Units held directly by Dominion Energy Midstream GP, LLC (“GP”). Cove Point owns all of the membership interests in GP and Dominion owns all of the common stock of Cove Point. Accordingly, Dominion may be deemed to indirectly beneficially own the Common Units directly held by GP.

Includes 6,656,839 Common Units held directly by QPC Holding Company (“QPC Holdco”). Dominion Energy Questar Corporation (“Dominion Questar”) owns all of the common stock of QPC Holdco and Dominion owns all of the common stock of Dominion Questar. Accordingly, Dominion may be deemed to indirectly beneficially own all of the Common Units directly held by QPC Holdco.

 

2.

Based upon 126,607,641 Common Units outstanding as of September 19, 2018, such numbers having been provided to the filing persons by the Issuer.

 

2


  1   

Name of reporting persons

 

Dominion Cove Point, Inc.

 

I.R.S. identification nos. of above persons (entities only)

 

81-0571791

  2  

Check the appropriate box if a member of a group

(a): ☐

(b): ☐

 

  3  

SEC use only

 

  4  

Source of funds

 

OO

  5  

Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e)

 

  6  

Citizenship or place of organization

 

Virginia

Number of

Shares

Beneficially

Owned by

Each

Reporting

Person

with

 

     7    

Sole voting power

 

0

     8   

Shared voting power

 

70,495,6601

     9   

Sole dispositive power

 

0

   10   

Shared dispositive power

 

70,495,6601

11   

Aggregate amount beneficially owned by each reporting person

 

70,495,6601

12  

Check if the aggregate amount in row (11) excludes certain shares

 

13  

Percent of class represented by amount in row (11)

 

55.7%2

14  

Type of reporting person

 

CO

 

1.

Includes 43,820,578 Common Units in the Issuer held directly by Holdco. Cove Point owns all of the membership interests in Holdco. Accordingly, Cove Point may be deemed to indirectly beneficially own the Common Units directly held by Holdco.

Includes 26,675,082 Common Units held directly by GP. Cove Point owns all of the membership interests in GP. Accordingly, Cove Point may be deemed to indirectly beneficially own the Common Units directly held by GP.

 

2.

Based upon 126,607,641 Common Units outstanding as of September 19, 2018, such numbers having been provided to the filing persons by the Issuer.

 

3


  1   

Name of reporting persons

 

Dominion MLP Holding Company, LLC

 

I.R.S. identification nos. of above persons (entities only)

 

46-5165270

  2  

Check the appropriate box if a member of a group

(a): ☐

(b): ☐

 

  3  

SEC use only

 

  4  

Source of funds

 

OO

  5  

Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e)

 

  6  

Citizenship or place of organization

 

Delaware

Number of

Shares

Beneficially

Owned by

Each

Reporting

Person

with

 

     7    

Sole voting power

 

0

     8   

Shared voting power

 

43,820,5781

     9   

Sole dispositive power

 

0

   10   

Shared dispositive power

 

43,820,5781

11   

Aggregate amount beneficially owned by each reporting person

 

43,820,5781

12  

Check if the aggregate amount in row (11) excludes certain shares

 

13  

Percent of class represented by amount in row (11)

 

34.6%2

14  

Type of reporting person

 

OO (Limited Liability Company)

 

1.

Includes 43,820,578 Common Units in the Issuer held directly by Holdco.

2.

Based upon 126,607,641 Common Units outstanding as of September 19, 2018, such numbers having been provided to the filing persons by the Issuer.

 

4


  1   

Name of reporting persons

 

Dominion Energy Midstream GP, LLC

 

I.R.S. identification nos. of above persons (entities only)

 

46-5148150

  2  

Check the appropriate box if a member of a group

(a): ☐

(b): ☐

 

  3  

SEC use only

 

  4  

Source of funds

 

OO

  5  

Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e)

 

  6  

Citizenship or place of organization

 

Delaware

Number of

Shares

Beneficially

Owned by

Each

Reporting

Person

with

 

     7    

Sole voting power

 

0

     8   

Shared voting power

 

26,675,0821

     9   

Sole dispositive power

 

0

   10   

Shared dispositive power

 

26,675,0821

11   

Aggregate amount beneficially owned by each reporting person

 

26,675,0821

12  

Check if the aggregate amount in row (11) excludes certain shares

 

13  

Percent of class represented by amount in row (11)

 

21.1%2

14  

Type of reporting person

 

CO

 

1.

Includes 26,675,082 Common Units in the Issuer held directly by Holdco.

2.

Based upon 126,607,641 Common Units outstanding as of September 19, 2018, such numbers having been provided to the filing persons by the Issuer.

 

5


  1   

Name of reporting persons

 

Dominion Energy Questar Corporation

 

I.R.S. identification nos. of above persons (entities only)

 

87-0407509

  2  

Check the appropriate box if a member of a group

(a): ☐

(b): ☐

 

  3  

SEC use only

 

  4  

Source of funds

 

OO

  5  

Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e)

 

  6  

Citizenship or place of organization

 

Utah

Number of

Shares

Beneficially

Owned by

Each

Reporting

Person

with

 

     7    

Sole voting power

 

0

     8   

Shared voting power

 

6,656,8391

     9   

Sole dispositive power

 

0

   10   

Shared dispositive power

 

6,656,8391

11   

Aggregate amount beneficially owned by each reporting person

 

6,656,8391

12  

Check if the aggregate amount in row (11) excludes certain shares

 

13  

Percent of class represented by amount in row (11)

 

5.3%2

14  

Type of reporting person

 

CO

 

1.

Includes 6,656,839 Common Units in the Issuer held directly by QPC Holdco. Dominion Questar owns all of the common stock of QPC Holdco. Accordingly, Dominion Questar may be deemed to indirectly beneficially own the Common Units held by QPC Holdco.

2.

Based upon 126,607,641 Common Units outstanding as of September 19, 2018, such numbers having been provided to the filing persons by the Issuer.

 

6


  1   

Name of reporting persons

 

QPC Holding Company

 

I.R.S. identification nos. of above persons (entities only)

 

81-3649530

  2  

Check the appropriate box if a member of a group

(a): ☐

(b): ☐

 

  3  

SEC use only

 

  4  

Source of funds

 

OO

  5  

Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e)

 

  6  

Citizenship or place of organization

 

Utah

Number of

Shares

Beneficially

Owned by

Each

Reporting

Person

with

 

     7    

Sole voting power

 

0

     8   

Shared voting power

 

6,656,8391

     9   

Sole dispositive power

 

0

   10   

Shared dispositive power

 

6,656,8391

11   

Aggregate amount beneficially owned by each reporting person

 

6,656,8391

12  

Check if the aggregate amount in row (11) excludes certain shares

 

13  

Percent of class represented by amount in row (11)

 

5.3%2

14  

Type of reporting person

 

CO

 

1.

Includes 6,656,839 Common Units held directly by QPC Holdco.

2.

Based upon 126,607,641 Common Units outstanding as of September 19, 2018, such numbers having been provided to the filing persons by the Issuer.

 

7


Note: This Amendment No. 5 amends and supplements the Schedule 13D originally filed with the Securities and Exchange Commission on April 2, 2015 and subsequently amended on October 6, 2015, January 29, 2016, December 1, 2016 and July 9, 2018. Capitalized terms used in this Amendment No. 5 and not defined herein have the respective meanings ascribed to such terms in the Schedule 13D, as previously amended.

 

Item 2.

Identity and Background.

The information previously provided in response to this Item 2 is hereby amended and supplemented as follows:

The information required by subparagraphs (a), (b), (c) and (f) of this Item with respect to the directors and executive officers of the Reporting Persons is set forth on Schedule A attached hereto and is incorporated herein by reference.

During the last five years, none of the Reporting Persons nor, to the best of the Reporting Persons’ knowledge, any of the persons identified on Schedule A has been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors.

During the last five years, none of the Reporting Persons nor, to the best of the Reporting Persons’ knowledge, any of the persons identified on Schedule A was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

 

Item 4.

Purpose of Transaction

Item 4 is hereby supplemented as follows:

On September 19, 2018, Thomas F. Farrell, II, Chairman, President and Chief Executive Officer of Dominion, delivered a non-binding offer (the “Offer Letter”) to the Issuer to acquire all of the outstanding Common Units of the Issuer not already owned by Dominion and its affiliates in exchange for common shares of Dominion, no par value (the “Dominion Common Shares”), at an exchange ratio of 0.2468 Dominion Common Shares for each Common Unit of the Issuer. The foregoing description of the Offer Letter does not purport to be complete and is qualified in its entirety by reference to the full text of the Offer Letter, which is filed as Exhibit 1 hereto and is incorporated by reference in its entirety into this Item 4.

There can be no assurance that any discussions that may occur between Dominion and the Issuer with respect to Dominion’s offer will result in the entry into a definitive agreement concerning a transaction or, if such a definitive agreement is reached, will result in the consummation of a transaction provided for in such definitive agreement. Discussions concerning a transaction may be terminated at any time and without prior notice. Entry into a definitive agreement concerning a transaction and the consummation of any such transaction is subject to a number of contingencies that are beyond the control of Dominion, including the satisfactory completion of due diligence, the approval of the board of directors of GP (the “Issuer Board”), the recommendation of the conflicts committee of the Issuer Board, approval by holders of a majority of the outstanding Common Units of the Issuer, and the satisfaction of any conditions to the consummation of a transaction set forth in any such definitive agreement.

Dominion does not intend to disclose developments with respect to the foregoing unless and until the Issuer Board and Dominion have approved a specific transaction, if any, and Dominion and the Issuer have then entered into a definitive agreement to effect such transaction, except as may be required by law. The foregoing is not intended to limit the matters previously disclosed in Item 4 of this Schedule 13D.

 

Item 6.

Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

The information provided or incorporated by reference in Item 4 is hereby incorporated by reference herein.

 

Item 7.

Material to Be Filed as Exhibits.

 

Exhibit

  

Description

1.    Offer Letter, dated September 19, 2018

 

8


SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Dated: September 21, 2018

 

DOMINION ENERGY, INC.

a Virginia corporation

By:  

/s/ James R. Chapman

  James R. Chapman
  Senior Vice President - Mergers & Acquisitions and Treasurer

DOMINION COVE POINT, INC.

a Virginia corporation

By:  

/s/ James R. Chapman

  James R. Chapman
  Senior Vice President - Mergers & Acquisitions and Treasurer

DOMINION MLP HOLDING COMPANY, LLC

a Delaware limited liability company

By:  

/s/ James R. Chapman

  James R. Chapman
  Senior Vice President - Mergers & Acquisitions and Treasurer

DOMINION ENERGY MIDSTREAM GP, LLC

a Delaware limited liability company

By:  

/s/ James R. Chapman

  James R. Chapman
  Senior Vice President - Mergers & Acquisitions and Treasurer

DOMINION ENERGY QUESTAR CORPORATION

a Utah corporation

By:  

/s/ James R. Chapman

  James R. Chapman
  Senior Vice President - Mergers & Acquisitions and Treasurer

QPC HOLDING COMPANY

a Utah corporation

By:  

/s/ James R. Chapman

  James R. Chapman
  Senior Vice President - Mergers & Acquisitions and Treasurer

 

9


SCHEDULE A

DIRECTORS AND EXECUTIVE OFFICERS OF

DOMINION ENERGY, INC.

The business address of each person listed below is c/o Dominion Energy, Inc., 120 Tredegar Street, Richmond, Virginia 23219. Each person is a United States citizen.

Directors:

 

Name

 

Present Principal Occupation

   Units Held  
William P. Barr   Of Counsel, Kirkland & Ellis LLP      63,200  
Helen E. Dragas   President and Chief Executive Officer, The Dragas Companies      25,000  

Adm. James O. Ellis, Jr.,
U.S. Navy (Ret.)

  Former President and Chief Executive Officer, Institute of Nuclear Power Operations      10,000  
Thomas F. Farrell, II   Chairman, President and Chief Executive Officer, Dominion Energy, Inc.      69,900  
John W. Harris   Chairman and Chief Executive Officer, Lincoln Harris LLC      —    
Ronald W. Jibson   Retired Chairman, President and Chief Executive Officer, Questar Corporation      —    
Mark J. Kington   Managing Director, Kington Management, LLC      50,000  
Joseph M. Rigby   Retired Chairman, President and Chief Executive Officer of Pepco Holdings, Inc.      10,046  
Pamela J. Royal, M.D.   President, Royal Dermatology and Aesthetic Skin Care, Inc.      2,400  
Robert H. Spilman, Jr.   President and Chief Executive Officer, Bassett Furniture Industries, Incorporated      12,500  
Susan N. Story   President and Chief Executive Officer of American Water Works Company, Inc.      —    
Michael E. Szymanczyk   Former Chairman and Chief Executive Officer, Altria Group, Inc.      25,000  

Executive Officers:

 

Name

 

Present Principal Occupation

   Units Held  
Thomas F. Farrell, II   Chairman, President and Chief Executive Officer      69,900  
Mark F. McGettrick   Executive Vice President and Chief Financial Officer      64,900  
Diane Leopold   Executive Vice President and President & CEO – Gas Infrastructure Group      2,500  
Paul D. Koonce   Executive Vice President and President & CEO – Power Generation Group      50,000  
Robert M. Blue   Executive Vice President and President & CEO – Power Delivery Group      5,000  
Mark O. Webb   Senior Vice President – Corporate Affairs and Chief Innovation Officer      4,000  
Carlos M. Brown   Vice President and General Counsel      3,300  
Michele L. Cardiff   Vice President, Controller and Chief Accounting Officer      500  


DIRECTORS AND EXECUTIVE OFFICERS OF

DOMINION COVE POINT, INC.

The business address of each person listed below is c/o Dominion Cove Point, Inc., 120 Tredegar Street, Richmond, Virginia 23219. Each person is a United States citizen.

Directors:

 

Name

 

Present Principal Occupation

   Units Held  

Thomas F. Farrell, II

  Chairman, President and Chief Executive Officer, Dominion Energy, Inc.      69,900  

Diane Leopold

  Executive Vice President and President & CEO - Gas Infrastructure Group, Dominion Energy, Inc.      2,500  

Mark F. McGettrick

  Executive Vice President and Chief Financial Officer, Dominion Energy, Inc.      64,900  

Executive Officers:

 

Name

 

Present Principal Occupation

   Units Held  

Diane Leopold

  President      2,500  

Carlos M. Brown

  Vice President and General Counsel      3,300  

Michele L. Cardiff

  Vice President, Controller and Chief Accounting Officer      500  


DIRECTORS AND EXECUTIVE OFFICERS OF

DOMINION MLP HOLDING COMPANY, LLC

The business address of each person listed below is c/o Dominion MLP Holding Company, LLC, 120 Tredegar Street, Richmond, Virginia 23219. Each person is a United States citizen.

Executive Officers:

 

Name

 

Present Principal Occupation

   Units Held  
Thomas F. Farrell, II   Chief Executive Officer      69,900  
Mark F. McGettrick   Executive Vice President and Chief Financial Officer      64,900  
Carlos M. Brown   Vice President and General Counsel      3,300  
Michele L. Cardiff   Vice President, Controller and Chief Accounting Officer      500  


DIRECTORS AND EXECUTIVE OFFICERS OF

DOMINION ENERGY MIDSTREAM GP, LLC

The business address of each person listed below is c/o Dominion Energy Midstream GP, LLC, 120 Tredegar Street, Richmond, Virginia 23219. Each person is a United States citizen.

Directors:

 

Name

 

Present Principal Occupation

   Units Held  

Thomas F. Farrell, II

  Chairman, President and Chief Executive Officer of Dominion Energy, Inc.      69,900  

Diane Leopold

  Executive Vice President and President & CEO - Gas Infrastructure Group, Dominion Energy, Inc.      2,500  

John A. Luke, Jr.

  Non-executive Chairman of WestRock Company      4,995  

Mark F. McGettrick

  Executive Vice President and Chief Financial Officer of Dominion Energy, Inc.      64,900  

Harris H. Simmons

  CEO and Chairman of Zions Bancorporation      6,109  

John W. Snow

  Non-executive Chairman of Cerberus Capital Management, L.P.      77,837  

David A. Wollard

  Founding Chairman, emeritus, Exempla Healthcare      26,137  

Executive Officers:

 

Name

 

Present Principal Occupation

   Units Held  

Thomas F. Farrell, II

  President, Chairman and CEO      69,900  

Diane Leopold

  Executive Vice President and President & CEO – Gas Infrastructure Group      2,500  

Mark F. McGettrick

  Executive Vice President and Chief Financial Officer      64,900  

Mark O. Webb

  Senior Vice President – Corporate Affairs and Chief Innovation Officer      4,000  

Paul E. Ruppert

  Senior Vice President and President – Gas Transmission       

Carlos M. Brown

  Vice President and General Counsel      3,300  

Michele L. Cardiff

  Vice President, Controller and Chief Accounting Officer      500  


DIRECTORS AND EXECUTIVE OFFICERS OF

DOMINION ENERGY QUESTAR CORPORATION

The business address of each person listed below is c/o Dominion Energy Questar Corporation, 333 South State Street, Salt Lake City, Utah 84111. Each person is a United States citizen.

Director:

 

Name

 

Present Principal Occupation

   Units Held  
Diane Leopold   Executive Vice President and President & CEO - Gas Infrastructure Group, Dominion Energy, Inc.      2,500  

Executive Officers:

 

Name

 

Present Principal Occupation

  Units Held  

Thomas F. Farrell, II

 

Chief Executive Officer

    69,900  

Diane Leopold

 

President

    2,500  

Mark F. McGettrick

 

Executive Vice President and Chief Financial Officer

    64,900  

Carlos M. Brown

 

Vice President and General Counsel

    3,300  

Michele L. Cardiff

 

Vice President, Controller and Chief Accounting Officer

    500  


DIRECTORS AND EXECUTIVE OFFICERS OF

QPC HOLDING COMPANY

The business address of each person listed below is c/o QPC Holding Company, 333 South State Street, Salt Lake City, Utah 84111. Each person is a United States citizen.

Director:

 

Name

 

Present Principal Occupation

   Units Held  

Diane Leopold

  Executive Vice President and President & CEO - Gas Infrastructure Group, Dominion Energy, Inc.      2,500  

Executive Officers:

 

Name

 

Present Principal Occupation

   Units Held  

Diane Leopold

  President      2,500  

Carlos M. Brown

  Vice President and General Counsel      3,300  

Michele L. Cardiff

  Vice President, Controller and Chief Accounting Officer      500  
EX-99.1

Exhibit 1

[DOMINION ENERGY, INC. LETTERHEAD]

September 19, 2018

Dominion Energy Midstream Partners, LP

c/o Dominion Energy Midstream GP, LLC, its General Partner

120 Tredegar Street

Richmond, Virginia 23219

Attn:

Members of the Board of Directors of Dominion Energy Midstream GP, LLC

 

RE:

Possible acquisition of all outstanding publicly-held Common Units of Dominion Energy

Midstream Partners, LP

Ladies and Gentlemen:

Dominion Energy, Inc. (“Dominion Energy”) is pleased to submit this non-binding offer (this “Non-Binding Offer”) to Dominion Energy Midstream Partners, LP (“DEM”) regarding a possible transaction pursuant to which Dominion Energy, through a wholly owned subsidiary (“Merger Sub”) would acquire all of the outstanding Common Units of DEM not already owned by Dominion Energy and its affiliates (the “Transaction”), as described in more detail below.

As you are aware, Dominion Energy currently indirectly owns, through various of its wholly owned subsidiaries, 77,152,499 DEM Common Units, representing 60.9% of the total outstanding Common Units of DEM, and 11,365,628 DEM Series A Preferred Units, representing 37.5% of the total outstanding Series A Preferred Units of DEM. In addition, Dominion Energy currently indirectly owns the non-economic general partner interest in DEM through its wholly owned subsidiary Dominion Energy Midstream GP, LLC (“DEM GP”), the general partner of DEM. Subject to the negotiation and execution of a definitive agreement containing terms and conditions customary for a transaction of the type set out in this letter, we are pleased to offer 0.2468 Common Shares of Dominion Energy in exchange for each issued and outstanding publicly-held Common Unit of DEM.

We believe this proposal is attractive to public holders of DEM Common Units. In light of recent regulatory developments that have affected both DEM and the master limited partnership (“MLP”) market in the U.S. more broadly, we are of the view that a combination transaction is the best strategic alternative currently available to DEM to maximize value for all of its unitholders. We believed the proposed exchange ratio for DEM Common Units reflects a fair value to the stand-alone value of DEM’s Common Units today. In particular, the value offered for all of DEM’s outstanding publicly-traded Common Units takes into account the difficulty of supporting DEM’s distribution levels in the future, given the combined impact of the announcement of the Federal Energy Regulatory Commission’s income tax allowance policy change and U.S. tax reform on MLP market valuations and the resulting impact on MLPs’ access to capital at reasonable rates.

Dominion Energy’s proposal offers unitholders a security with enhanced trading liquidity and provides direct ownership in one of the nation’s largest producers and transporters of energy with reliable cash flow generation supporting attractive dividend growth.


Dominion Energy Midstream Partners, LP

September 19, 2018

Page 2

 

1.

Principal Terms; Key Assumptions.

The Transaction would be structured as a merger between DEM and Merger Sub, with DEM surviving the merger. The consideration payable in the Transaction will be a share-for-unit exchange of 0.2468 Common Shares for each issued and outstanding publicly-held Common Unit of DEM, as described above.

Key Assumptions

The principal terms set out above are based on the following key assumptions:

(a) Dominion Energy, Merger Sub and DEM would enter into a definitive merger agreement (the “Definitive Agreement”) that would set out all of the terms and conditions relevant to the Transaction.

(b) The Transaction would be subject to customary closing conditions.

(c) The Transaction would be approved by the conflicts committee of the board of directors of DEM GP, the general partner of DEM.

(d) The closing of the Transaction would be subject to the (i) the consent of DEM GP and (ii) approval by holders of a majority of (a) the outstanding DEM Common Units and (b) the outstanding DEM Common Units and the outstanding DEM Series A Preferred Units voting together as a class pursuant to the terms of the Fourth Amended and Restated Agreement of Limited Partnership of DEM.

 

2.

Internal Approvals.

The Transaction has been reviewed by, and the delivery of this Non-Binding Offer to DEM has been approved by, the board of directors of Dominion Energy. Before Dominion Energy and Merger Sub would be in a position to enter into the Definitive Agreement with DEM, the Transaction would need to be reviewed and approved by the board of directors of Dominion Energy and Merger Sub. No approval or consent of Dominion Energy’s holders of Common Shares would be required for Dominion Energy to enter into or consummate the Transaction, including the issuance of Dominion Energy Common Shares in connection with the Transaction.

 

3.

Disclosures.

On September 19, 2018, Dominion Energy intends to (i) publicly announce that it has made an offer to DEM with respect to the Transaction, including disclosing the proposed share-for-unit exchange ratio and other key commercial terms of this Non-Binding Offer, (ii) provide its views with respect to DEM, and (iii) subsequently make related filings with various governmental authorities as required under applicable securities laws or regulations.


Dominion Energy Midstream Partners, LP

September 19, 2018

Page 3

 

4.

Legal Effect.

This Non-Binding Offer is not intended to, and does not constitute or create any legally binding obligations or liabilities on the part of Dominion Energy or any of its affiliates. A binding obligation of Dominion Energy (or any of its affiliates) to effect the Transaction shall be created only upon the execution and delivery by Dominion Energy, Merger Sub and DEM of a Definitive Agreement. Dominion Energy and its affiliates reserve their right to withdraw this Non-Binding Offer at any time, for any reason, at their sole discretion.

After receipt of this offer and the authorization and undertaking of the conflicts committee process with your advisors, if this Non-Binding Offer is acceptable to DEM, Dominion Energy and its affiliates are prepared to begin negotiating the Definitive Agreement and any related agreements with DEM with respect to the Transaction.

We look forward to receiving DEM’s response to this Non-Binding Offer and stand prepared to discuss our analysis of the potential Transaction at DEM’s convenience.

 

Sincerely,
DOMINION ENERGY, INC.
By:  

/s/ Thomas F. Farrell, II

Name:   Thomas F. Farrell, II
Title:   President and Chief Executive Officer