8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): February 7, 2018

Tallgrass Energy GP, LP

(Exact name of registrant as specified in its charter)

Delaware	001-37365	47-3159268
(State or Other Jurisdiction of Incorporation or Organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

4200 W. 115th Street, Suite 350 Leawood, Kansas	66211
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (913) 928-6060

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).

Emerging growth company  ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Item 1.01. Entry into a Material Definitive Agreement.

Tallgrass Equity Acquisition of 25.01% Interest in REX and Additional Common Units of TEP

On February 7, 2018, Tallgrass Energy GP, LP, a Delaware limited partnership (the “Partnership”), Tallgrass Development, LP, a Delaware limited partnership (“Development”), Tallgrass Equity, LLC, a Delaware limited liability company (“TE”), Tallgrass Development Holdings, LLC, a Delaware limited liability company and wholly owned subsidiary of TE (“Merger Sub”), and, for certain limited purposes, Tallgrass Energy Holdings, LLC, a Delaware limited liability company (“Holdings”) entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Development merged with and into Merger Sub, with Merger Sub remaining as the surviving company (the “Merger”), in exchange for (i) 27,554,785 units representing limited liability company interests in TE (“TE Units”), and (ii) 27,554,785 Class B Shares (as defined in the Partnership’s limited partnership agreement) (such TE Units and Class B Shares, together, the “Merger Consideration”). The Merger Consideration was paid to the limited partners of Development upon the closing of the Merger and such recipients were also granted certain registration rights with respect to the Merger Consideration under an existing registration rights agreement entered into by the Partnership and certain Class B shareholders. The Merger Agreement contains customary representations and warranties, indemnification obligations and covenants by the parties.

As a result of the Merger, Tallgrass Equity acquired a 25.01% membership interest in Rockies Express Pipeline LLC, a Delaware limited liability company (“REX”), and an additional 5,619,218 common units representing limited partner interests of Tallgrass Equity Partners, LP, a Delaware limited partnership (“TEP”). Including the 49.99% membership interest in REX held by TEP, TE now effectively controls an aggregate 75% membership interest in REX and owns an aggregate of 25,619,218 common units of TEP. The Partnership is the managing member of and therefore controls TE.

Prior to the Merger, Development entered into a Purchase and Sale Agreement with TEP effective as of February 1, 2018 whereby Development sold to TEP (i) a 2% membership interest in Tallgrass Pony Express Pipeline, LLC, a Delaware limited liability company, and (ii) a 100% membership interest in Tallgrass Operations, LLC, a Delaware limited liability company, in exchange for $59,610,975 in cash consideration (the “Pony Transaction”). As a result of the Pony Transaction, Pony Express and Operations are now indirect wholly-owned subsidiaries of TEP.

TEGP Management, LLC, a Delaware limited liability company (the “General Partner”), serves as the general partner of the Partnership. The Conflicts Committee of the Board of Directors of the General Partner recommended approval of the Merger to the Board of Directors, which then approved the Merger. The Conflicts Committee, which is composed entirely of independent directors, retained independent legal and financial advisors to assist in evaluating and negotiating the Merger.

The Merger Agreement and the above descriptions have been included to provide investors and security holders with information regarding the terms of the Merger Agreement. They are not intended to provide any other factual information about the Partnership, Development, TE, Merger Sub, Holdings or their respective subsidiaries or affiliates or equity holders. The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of that agreement and as of specific dates; were solely for the benefit of the parties to the Merger Agreement; and may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures made by each contracting party to the other as a way of allocating contractual risk between them that differ from those applicable to investors. Investors should be aware that these representations, warranties and covenants or any description thereof alone may not describe the actual state of affairs of the Partnership, Development, TE, Merger Sub, Holdings or their respective subsidiaries, affiliates, businesses or equity holders as of the date they were made or at any other time.

The above description does not purport to be a complete description of the Merger Agreement and is qualified in its entirety by the contents of the Merger Agreement, a copy of which will be filed as an exhibit to the Partnership’s Current Report on Form 10-Q for the quarter ended March 31, 2018.

Merger Consideration

Pursuant to the terms of the Merger Agreement, the Merger Consideration was issued to the limited partners of Development as follows:

Holder	TE Units and Class B Shares
Entities Affiliated with The Energy & Minerals Group	10,497,067
Entities Affiliated with Kelso & Company	11,646,401
Entities Affiliated with Magnetar Capital	1,417,566
Entities Affiliated with Management	3,725,519
Minority Investors	268,232
TOTAL	27,554,785

Pro Forma Organizational Structure

As a result of the transactions described herein, the organizational structure of the Partnership is as follows:

Item 2.01. Completion of Acquisition or Disposition of Assets

The information provided above under Item 1.01 is incorporated into this Item 2.01 by reference.

Item 7.01. Regulation FD Disclosure.

On February 7, 2018, the Partnership and TEP issued a joint press release announcing the Merger and the Pony Transaction. A copy of the press release is furnished with this Form 8-K as Exhibit 99.1 and incorporated into this Item 7.01 by reference.

In accordance with General Instruction B.2 to Form 8-K, the information provided in this Item 7.01 and attached to this Current Report on Form 8-K as Exhibit 99.1 shall be deemed to be “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of the general incorporation language of such filing, except as expressly set forth by specific reference in such filing.    

Item 9.01. Financial Statements and Exhibits.

(d)     Exhibits

EXHIBIT NUMBER	DESCRIPTION
99.1	Joint press release issued by Tallgrass Energy Partners, LP and Tallgrass Energy GP, LP, dated February 7, 2018 (Furnished solely for purposes of Item 7.01 of this Form 8-K).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		TALLGRASS ENERGY GP, LP
		By:	TEGP Management, LLC
			its general partner
Date:	February 7, 2018	By:	/s/ David G. Dehaemers, Jr.
			David G. Dehaemers, Jr.
			President and Chief Executive Officer

EX-99.1

Exhibit 99.1

Tallgrass Energy GP and Tallgrass Energy Partners Announce Acquisitions

and the Evaluation of Tallgrass Energy Organizational Structure

LEAWOOD, Kan.--(BUSINESS WIRE)-Tallgrass Energy GP, LP (NYSE: TEGP) and Tallgrass Energy Partners, LP (NYSE: TEP) (“TEP”) today announced that Tallgrass Equity, LLC ("Tallgrass Equity"), a subsidiary of TEGP, has acquired a 25.01 percent membership interest in Rockies Express Pipeline LLC (“REX”) and 5,619,218 TEP common units from Tallgrass Development, LP (“TD”). The companies also announced that TEP has acquired a 2 percent membership interest in Tallgrass Pony Express Pipeline, LLC ("Pony Express") and other administrative assets from TD. In addition, Tallgrass announced it is beginning an evaluation of potential reorganization alternatives involving TEGP and TEP.

Tallgrass Equity Acquisition and Anticipated Distribution Increase

On Feb. 7, 2018, TD merged into a wholly owned subsidiary of Tallgrass Equity. As a result, Tallgrass Equity acquired a 25.01 percent membership interest in REX and 5,619,218 TEP common units. In consideration, TEGP and Tallgrass Equity issued 27,554,785 unregistered TEGP Class B shares and Tallgrass Equity units valued at approximately $644.8 million based on the TEGP closing price on Feb. 6, 2018. The equity issued by TEGP and Tallgrass Equity was based on a discounted 30-day volume-weighted average price of TEGP Class A shares. The 25.01 percent REX membership interest was valued at approximately $400 million and the 5,619,218 TEP common units were valued at approximately $256.2 million based on a 30-day volume weighted average price.

Management intends to recommend to the board of directors of TEGP’s general partner that TEGP increase its quarterly distributions for the first and second quarters of 2018 by an aggregate of approximately $0.12 ($0.48 annualized) per class A share, which would be an increase of approximately 33 percent as compared to the quarterly distribution declared for the fourth quarter of 2017.

“This acquisition represents an accretive transaction for Tallgrass Equity and TEGP,” said Tallgrass President and CEO David G. Dehaemers Jr. “The TEGP equity consideration utilizes our most effective cost of equity at this time, and likely addresses Tallgrass Energy’s foreseeable equity capital requirements for currently known financing needs during 2018 and 2019. In addition, the TEGP share consideration received by Tallgrass Development partners demonstrates our continued belief in the long-term value creation opportunities that lie ahead for Tallgrass Energy. As sponsors, the TD partners continue to have a significant investment in Tallgrass Energy and we now have another $645 million invested as a result of this transaction.”

TEP Acquisition

Effective Feb. 1, 2018, TEP acquired a 2 percent membership interest in Pony Express and administrative assets -- primarily information technology assets -- from TD for cash consideration of approximately $60 million. TEP funded the transaction with borrowings under its revolving credit facility.

“The organic growth projects and third-party acquisitions TEP announced during 2017 and early 2018, including those issued earlier today, demonstrate our ability to continue to grow TEP distributions at an attractive rate without sponsor dropdowns,” Dehaemers said. “We continue to see capital deployment opportunities. Those opportunities can be made even more attractive to our partners when enhanced by the potential for a reduced cost of equity capital following a possible reorganization transaction involving TEGP and TEP.”

Evaluation of TEGP and TEP Reorganization Alternatives

Tallgrass is evaluating potential reorganization transactions that could, among other things, streamline and simplify TEP and TEGP’s organizational structure, improve its equity cost of capital, improve its debt cost of capital and facilitate financing of its current and future growth opportunities. Management expects that the evaluation process and any resulting transaction or transactions could potentially be completed by the end of 2018, although the process is ongoing and no decision to pursue a particular alternative has been reached. Tallgrass does not intend to disclose further developments with respect to the evaluation process except to the extent that a specific course of action is approved, the process is concluded, or it is required by law or otherwise deemed appropriate.

“Today’s announcements, including the merger of Tallgrass Development into a subsidiary of TEGP, reinforce our commitment to best position Tallgrass to be a fiscally prudent and growth-oriented midstream operator for decades to come and demonstrate what could be the first step in a potential reorganization transaction,” said Dehaemers.

Conference Call

Tallgrass plans to hold a conference call at 9:30 a.m. Central Time on Thursday, Feb. 8, 2018, to discuss these announcements as well as other announcements from Feb. 7, 2018. Tallgrass invites unitholders, shareholders and other interested parties to listen to the call through a link posted on the Investor Relations section of Tallgrass’ website at www.tallgrassenergy.com.

Cautionary Note Concerning Forward-Looking Statements

Disclosures in this press release contain forward-looking statements. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that management expects, believes or anticipates will or may occur in the future are forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include TEP or TEGP continuing to evaluate potential reorganization alternatives, whether such a transaction will occur in 2018 or at all, and whether such a transaction would improve Tallgrass's cost of equity and debt capital, facilitate financing of future growth opportunities or streamline Tallgrass's organizational structure; whether the acquisition by Tallgrass Equity of a 25.01 percent membership interest in REX and 5,619,218 TEP common units will be accretive and whether the use of equity consideration by TEGP and Tallgrass Equity to acquire such assets will address Tallgrass Energy's equity capital requirements during 2018 and 2019; TEP's ability to continue to grow distributions at an attractive rate without sponsor dropdowns; and whether TEGP will increase its quarterly distributions for the first and second quarters of 2018 by an aggregate of approximately $0.12 per Class A share, or at all. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of TEGP and TEP, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements, and other important factors that could cause actual results to differ materially from those projected, including those set forth in reports filed by TEGP and TEP with the Securities and Exchange Commission. Any forward-looking statement applies only as of the date on which such statement is made and TEGP and TEP do not intend to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.

About Tallgrass Energy

Tallgrass Energy is a family of companies that includes publicly traded partnerships Tallgrass Energy Partners, LP (NYSE: TEP) and Tallgrass Energy GP, LP (NYSE: TEGP). Operating across 11 states, Tallgrass is a growth-oriented midstream energy operator with transportation, storage, terminal, water, gathering and processing assets that serve some of the nation’s most prolific crude oil and natural gas basins.

To learn more, please visit our website at www.tallgrassenergy.com.

Contacts:

Tallgrass Energy

Investor and Financial Inquiries

Nate Lien, 913-928-6012

investor.relations@tallgrassenergylp.com

or

Media and Trade Inquiries

Phyllis Hammond, 303-763-3568

media.relations@tallgrassenergylp.com