Filed by Southcross Energy Partners, L.P.
Commission File
No. 001-35719
Pursuant to Rule 425 Under the Securities Act of 1933
And Deemed Filed Pursuant to Rule
14a-12
Under the Securities Exchange Act of 1934
Subject Company: Southcross Energy Partners, L.P.
Commission File No.:
001-35719
The following is an email sent to employees of Southcross Energy Partners GP, LLC on December 21, 2017.
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AMID / SXE
INTEGRATION
UPDATE
Functional Team Report Out
We are pleased to report the Functional Teams and Steering Committee leadership met
face-to-face
in a collaborative working session on Dec. 14, 2017 to report out on our initial plans for Day 1 readiness. During the session, we reviewed key accomplishments,
recognized challenges, and identified many critical Day 1 milestones. Were pleased to recognize the extensive amount of effort that has been put into the project plans. In our effort to continually improve our integration process, the plans
will evolve, but we feel that most of the functions have solid plans in place. We expect to baseline these plans in January.
Were pleased to recognize the extensive effort
put into Functional Team project plans.
Another common activity that all teams made progress on was on their analysis of the SXE people who will be converting or transitioning to AMID because of the
integration. Converting SXE employees are those who will have a role in the combined entity post close. Transitioning SXE employees are those whose employment with the combined entity will terminate after a
pre-determined
transition period post close. Weve reviewed rosters, spoken with existing SXE management, and met many of the dedicated and hard-working team at SXE. AMID is excited about the prospects of
having talented employees from SXE join the team, and were committed to completing the
end-to-end
assessment of the SXE team by Dec. 31.
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SOLID
PLANNING
Its hard to believe
that the holiday season has arrived along with the
year-end.
The Integration Team has been busy establishing integration processes and roles, developing project plans, and meeting as many SXE employees as
possible. We think that these activities position for us aggressive attainment of all deliverables required for a flawless transition after the close.
As we reflect upon our accomplishments of 2017, we extend our thanks for everyones contributions preparing for the
day when we operate as a single entity.
Happy Holidays!
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Some of the key highlights from the various functions are:
Commercial
The team put a great amount
of effort into documenting the SXE Texas Assets and the SXE
Contract-to-Cash
process. This effort specifically focused on TIES/Quorum. One outcome of these discussions
is identification of possible opportunities to optimize Quorum, scheduling, measurement, reporting, contracts and invoicing that will lead to AMID improvements that will be of value beyond the integration with SXE. Evaluation of that opportunity has
begun.
Next steps include:
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Continue discovery work around gas scheduling and nominations processes, gaps, and opportunities
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Conduct SXE working sessions focused on asset management, customer communications and management
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Begin planning Day 1 customer communications and potential targeted customer meetings
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Finance & Treasury
The team
conducted preliminary Financial Planning & Analysis (FP&A) discovery efforts, and scheduled a FP&A SXE model walkthrough in Dallas on Dec. 19. Preliminary evaluations of data sources and how that data needs to be mapped to AMID
Gathering & Transport have begun. Budget data will be mapped into OneStream, and we expect completion of that mapping process 30 to 60 days after the close. The team will be reviewing all SXE insurance policies, and the plan is to remarket
the combined company post close. The Treasury team will have all SXE lease information will be loaded into the Box collaboration tool by the end of the year. The strategy around corporate cards have been established.
Next steps include:
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Conduct
in-depth
SXE model walkthrough
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Review and analyze SXE Line of Credit (LC), leases, and parental company guarantees (PCGs)
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Devise insurance strategy with Lockton
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Internal Audit
Preliminary reviews indicate that our internal audit approaches are very complementary. The team understands the integration points, and is looking at key
controls to identify gaps. Internal Audit (IA) dependencies have been communicated to other functional teams, who will ensure they are include in the functional team work plans. IA met with the IT function to make sure that system dependencies are
reflected in the IA project plan.
Next steps include:
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Preparation of Controls mapping between the two companies
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Continue collecting requested documentation
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Accounting
The Accounting team has been focused on doing as much
pre-planning
work as possible, in anticipation of a lull in
accounting integration activities while they complete
year-end
close reports in January and February. They have met with the IT function to make sure that system dependencies are reflected in the Accounting
project plan. The integration team was instructed to capture integration costs in the same manner as was done in connection with AMIDs merger with JPE. SXE also has a plan for capturing their related costs.
Next steps include:
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Staffing transition plan finalization and commencement of hiring process
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Working on chart of accounts
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Continue collecting requested documentation
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Technical & Shared Services
A list of GIS data and system requirements has been completed. Gas and liquid integrity management plans have been received.
Next steps include:
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Functional teams review of VDR files
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Complete the project plan
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Ops Services & Control Center
Senior management visited each of these SXE sites in December for
meet-and-greet
meetings with employees:
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Lancaster Sour Gas Plant
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Bonnie View area team at the local community center
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While there, they provided SXE employees with an introduction to AMID, and held question and
answer sessions.
EHS & Regulatory
SXE is planning to adopt AMID Operations and Maintenance Safety plans before the close. They are in the process of issuing new SXE branded policies and procedures
that are duplicates of what AMID uses. This will provide earlier adoption of these critical safety plans, and ease of integration. There is a budget for rebranding. The plan is to apply stickers with the AMID logo and emergency phone numbers to SXE
pipelines. The SXE fleet inventory and replacement plans have been reviewed. AMID has requested that SXE delay executing new leases until after the close. This will give us the opportunity to consolidate to a single vendor that has a full-service
plan, and leverage buying power.
Next steps:
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Understand impact the legal entities will have on rebranding
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Legal
AMID has established deadlines for document requests from SXE, and performed a gap analysis regarding form contracts and policies. The filing for Mississippi is
currently in process, as are updates to the AMID Delegation of Authority (DOA).
Next steps:
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Review Records Management Policy
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Human Resources
HR has collected and evaluated SXE organizational structure, job titles, pay grades, incentives plans, appraisal system, drug screening policy, employee handbook
and benefit structure. The AMID management team had and continues to have conversations with SXE employees to determine their level of interest in becoming part of the AMID team. HR is in the process of concluding the SXE employee transitions /
conversion plans, and is
on-track
to have that complete by the end of the month. Tentative dates for SXE open enrollment meetings have been secured, and 401K conversion date options with Fidelity have been
reserved.
Next steps:
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Complete workforce transition and conversion analysis
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Develop SXE transition and conversion letters for all SXE employees
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Finalize plan to communicate drug test requirements
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Information Technology
Business Technology (BT): The IT integration team distributed the first iteration of the SXE systems landscape diagram to the integration management team. The
document is intended to provide a common baseline understanding of the IT systems supporting SXE as the integration teams, enhance future business process discussions and continue to identify dependencies between business processes. The IT and
Commercial integration teams have completed the first review of the
Contract-to-Cash
process (TIES/Quorum integration), and plan to perform additional reviews of the
Procure-to-Pay
and
Hire-to-Retire
processes over the next several weeks. Based on the actions
completed to date, the IT integration team has identified key post-close BT integration milestones.
Enterprise Technology (ET): The IT integration team has
initiated planning for Day 1 activation of current SXE employees on Microsoft Office 365 for AMID email support. On Day 1, SXE employees will have an AMID email account, however, historical email data cannot be moved to AMID until after the close.
SXE employees can expect additional communication in the next several months regarding more specific timing on the transfer of historical data. In addition, the AMID intranet will be accessible to SXE employees on Day 1. The IT team will begin the
integration of content post-close and are targeting Q3 for full integration of Intranet content and SharePoint data.
Next steps:
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Continue reviews of IT landscape diagram with all functional areas
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Confirm business processes impacting IT systems by functional area
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Interlock system timelines with functional business leads
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Continue identification of IT milestones and dependencies
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Finalize enterprise technology Day 1
cut-over
plans
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All integration
work involves planning for how the integrated company will operate after the transaction closes. Until the transaction is completed, the parties remain separate and independent competitors in the market, and it remains business as usual for each
company. This issue is purely informational and does provide any binding right for employees of either AMID or SXE.
Forward Looking Statements
This employee communication and accompanying statements may contain forward-looking statements within the meaning of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. All statements that are not statements of historical facts, including statements regarding SXEs future financial position, results, business strategy, guidance, distribution growth, and plans
and objectives of management for future operations, are forward-looking statements. We have used the words anticipate, believe, could, estimate, expect, intend, may,
plan, predict, project, should, will, would, potential, and similar terms and phrases to identify forward-looking statements in this communication. Although we
believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions could be inaccurate, and, therefore, we cannot assure you that the forward-looking statements included herein will prove to be accurate.
These forward-looking statements reflect our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors, many of which are outside our control. Additional risks include the
following: the ability to obtain requisite regulatory and unitholder approval and the satisfaction of the other conditions to the consummation of the proposed transaction, the ability of AMID to successfully integrate SXEs operations and
employees and realize anticipated synergies and cost savings, actions by third parties, the potential impact of the announcement or consummation of the proposed transaction on relationships, including with employees, suppliers, customers,
competitors and credit rating agencies, and the ability to achieve revenue and other financial growth, and volatility in the price of oil, natural gas, and natural gas liquids and the credit market. Actual results and trends in the future may differ
materially from those suggested or implied by the forward-looking statements depending on a variety of factors which are described in greater detail in our filings with the SEC. Please see SXE and AMIDs Risk Factors and other
disclosures included in their Annual Reports on Form
10-K
for the year ended December 31, 2016, and Quarterly Reports on Form
10-Q
for the quarter ended
March 31, 2017, the quarter ended June 30, 2017 and the quarter ended September 30, 2017. All future written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their
entirety by the previous statements. The forward-looking statements herein speak as of the date of this employee communication. SXE and AMID undertake no obligation to update any information contained herein or to publicly release the results of any
revisions to any forward-looking statements that may be made to reflect events or circumstances that occur, or that we become aware of, after the date of this employee communication.
Additional Information and Where to Find It
This employee
communication relates to a proposed business combination between SXE and AMID. In connection with the proposed transaction, SXE and/or AMID expects to file a proxy statement/prospectus and other documents with the SEC.
In connection with the Merger, AMID intends to file a registration statement on Form
S-4,
including a proxy
statement/prospectus of SXE and AMID, with the SEC. WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS THAT MAY BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Any definitive proxy statement/prospectus (if and when available) will be mailed to unitholders of SXE. Investors and security holders will be able to obtain these materials (if and when
they are available) free of charge at the SECs website, www.sec.gov. In addition, copies of any documents filed with the SEC may be obtained free of charge from SXEs investor relations website for investors at
http://investors.southcrossenergy.com, and from AMIDs investor relations website at http://www.americanmidstream.com/investorrelations. The content of the websites referenced above are not deemed to be incorporated by reference into the
registration statement or the proxy statement/prospectus. Investors and security holders may also read and copy any reports, statements and other information filed by AMID and SXE with the SEC at the SEC public reference room at 100 F Street, N.E.,
Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
or visit the SECs website for further information on its
public reference room.
No Offer or Solicitation
This employee communication is for information purposes only and 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, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Participants in the Solicitation
AMID and SXE and their
respective directors and executive officers may be considered participants in the solicitation of proxies in connection with the proposed transaction. Information regarding SXEs directors and executive officers is available in its Annual
Report on Form
10-K
for the year ended December 31, 2016, filed with the SEC on March 9, 2017. Information regarding AMIDs directors and executive officers is available in its Annual Report on
Form
10-K
for the year ended December 31, 2016, filed with the SEC on March 28, 2017. Other information regarding the participants in the proxy solicitation and a description of their direct and
indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available.