Moody’s reviews American Midstream, Southcross

Moody's Investors Service said it placed American Midstream Partners, LP's (AMID) B2 corporate family rating and all its other credit ratings under review for downgrade following its agreement to acquire Southcross Holdings Borrower LP and Southcross Energy Partners, LP in an all-stock transaction.

At the same time, the agency placed Southcross' Caa1 corporate family rating, Southcross Holdings’ Caa3 corporate family rating and all other credit ratings of both entities under review for upgrade.

American Midstream will acquire 100% of Southcross Holdings and Southcross for a total consideration of $815 million and will refinance all of each company's outstanding debt.

"We view this transaction to be leveraging for AMID," Moody's analyst Prateek Reddy said in a news release.

"While the transaction is an equity for equity exchange with Southcross' and Southcross Holdings' unitholders, AMID is increasing debt and primarily adding exposure to gathering and processing in areas of the Eagle Ford Shale with limited volume growth prospects at least through the end of 2018."

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