Certain Provisions of the Partnership Agreement

12 Months Ended

Dec. 31, 2021

Certain Provisions of the Partnership Agreement

(8) Certain Provisions of the Partnership Agreement

(a) Series B Preferred Units

Issuance and Ownership

In January 2016, ENLK issued an aggregate of 50,000,000 Series B Preferred Units representing ENLK limited partner interests to Enfield in a private placement for a cash purchase price of $15.00 per Series B Preferred Unit (the “Issue Price”). On August 4, 2021, Enfield Holdings, L.P. (“Enfield”) sold all of its Series B Preferred Units and ENLC Class C Common

Units representing limited liability company interests in ENLC to Brookfield Infrastructure Partners L.P. and funds managed by Oaktree Capital Management, L.P.

Redemption

In December 2021, we redeemed 3,300,330 Series B Preferred Units for total consideration of $50.0 million plus accrued distributions. In addition, upon such redemption, a corresponding number of ENLC Class C Common Units were automatically cancelled. The redemption price represents 101% of the preferred units’ par value. In connection with the Series B Preferred Unit redemption, we have agreed with the holders of the Series B Preferred Units that we will pay cash in lieu of making a quarterly PIK distribution through the distribution declared for the fourth quarter of 2022.

Conversion and Distributions

Series B Preferred Units are exchangeable for ENLC common units in an amount equal to the number of outstanding Series B Preferred Units outstanding multiplied by the exchange ratio of 1.15, subject to certain adjustments (the “Series B Exchange Ratio”). The exchange is subject to ENLK’s option to pay cash instead of issuing additional ENLC common units, and can occur in whole or in part at the option of the holder of the Series B Preferred Units at any time, or in whole at our option, provided the daily volume-weighted average closing price of the ENLC common units for the 30 trading days ending two trading days prior to the exchange is greater than 150% of the Issue Price divided by the conversion ratio of 1.15.

The holder of the Series B Preferred Units is entitled to quarterly cash distributions and distributions in-kind of additional Series B Preferred Units. The quarterly in-kind distribution (the “Series B PIK Distribution”) equals the greater of (A) 0.0025 Series B Preferred Units per Series B Preferred Unit and (B) the number of Series B Preferred Units equal to the quotient of (x) the excess (if any) of (1) the distribution that would have been payable by ENLC had the Series B Preferred Units been exchanged for ENLC common units but applying a one-to-one exchange ratio (subject to certain adjustments) instead of the Series B Exchange Ratio, over (2) $0.28125 per Series B Preferred Unit (the “Cash Distribution Component”), divided by (y) the Issue Price. Except as described above with respect to distributions made until the distribution declared for the fourth quarter of 2022, the quarterly cash distribution (the “Series B Cash Distribution”) consists of the Cash Distribution Component plus an amount in cash that will be determined based on a comparison of the value (applying the Issue Price) of (i) the Series B PIK Distribution and (ii) the Series B Preferred Units that would have been distributed in the Series B PIK Distribution if such calculation applied the Series B Exchange Ratio instead of the one-to-one ratio (subject to certain adjustments).

A summary of the distribution activity relating to the Series B Preferred Units for the years ended December 31, 2021, 2020, and 2019 is provided below:


Declaration period	Distribution paid as additional Series B Preferred Units	Cash distribution (in millions)		Date paid/payable
2021
First Quarter of 2021	150,871	$	17.0	May 14, 2021
Second Quarter of 2021	151,248	$	17.0	August 13, 2021
Third Quarter of 2021	151,626	$	17.1	November 12, 2021
Fourth Quarter of 2021	—	$	19.2	February 11, 2022 (1)

2020
First Quarter of 2020	149,371	$	16.8	May 13, 2020
Second Quarter of 2020	149,745	$	16.8	August 13, 2020
Third Quarter of 2020	150,119	$	16.9	November 13, 2020
Fourth Quarter of 2020	150,494	$	16.9	February 12, 2021

2019
First Quarter of 2019	147,887	$	16.7	May 14, 2019
Second Quarter of 2019	148,257	$	17.1	August 13, 2019
Third Quarter of 2019	148,627	$	17.1	November 13, 2019
Fourth Quarter of 2019	148,999	$	16.8	February 13, 2020

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(1)In December 2021 and January 2022, we paid $0.9 million and $1.0 million, respectively, of accrued distributions on the Series B Preferred Units redeemed. The remaining distribution of $17.3 million related to the fourth quarter of 2021 will be payable February 11, 2022. See “Note 18—Subsequent Event” for more information regarding the January 2022 Series B Preferred Unit redemption.

(b) Series C Preferred Units

In September 2017, ENLK issued 400,000 Series C Preferred Units representing ENLK limited partner interests at a price to the public of $1,000 per unit. The Series C Preferred Units represent perpetual equity interests in ENLK and, unlike ENLK’s indebtedness, will not give rise to a claim for payment of a principal amount at a particular date. As to the payment of distributions and amounts payable on a liquidation event, the Series C Preferred Units rank senior to ENLK’s common units and to each other class of limited partner interests or other equity securities established after the issue date of the Series C Preferred Units that is not expressly made senior or on parity with the Series C Preferred Units. The Series C Preferred Units rank junior to the Series B Preferred Units with respect to the payment of distributions, and junior to the Series B Preferred Units and all current and future indebtedness with respect to amounts payable upon a liquidation event.

At any time on or after December 15, 2022, ENLK may redeem, at ENLK’s option, in whole or in part, the Series C Preferred Units at a redemption price in cash equal to $1,000 per Series C Preferred Unit plus an amount equal to all accumulated and unpaid distributions, whether or not declared. ENLK may undertake multiple partial redemptions. In addition, at any time within 120 days after the conclusion of any review or appeal process instituted by ENLK following certain rating agency events, ENLK may redeem, at ENLK’s option, the Series C Preferred Units in whole at a redemption price in cash per unit equal to $1,020 plus an amount equal to all accumulated and unpaid distributions, whether or not declared.

Distributions on the Series C Preferred Units accrue and are cumulative from the date of original issue and payable semi-annually in arrears on the 15th day of June and December of each year through and including December 15, 2022 and, thereafter, quarterly in arrears on the 15th day of March, June, September, and December of each year, in each case, if and when declared by the General Partner out of legally available funds for such purpose. The initial distribution rate for the Series C Preferred Units from and including the date of original issue to, but not including, December 15, 2022 is 6.0% per annum. On and after December 15, 2022, distributions on the Series C Preferred Units will accumulate for each distribution period at a percentage of the $1,000 liquidation preference per unit equal to an annual floating rate of the three-month LIBOR plus a spread

of 4.11%. For each of the years ended December 31, 2021, 2020, and 2019, ENLK made distributions of $24.0 million to the holders of Series C Preferred Units.