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Alliance Resource Partners, Alliance Holdings GP Launch Simplification Transactions.

M2 EQUITYBITES-February 26, 2018-Alliance Resource Partners, Alliance Holdings GP Launch Simplification Transactions

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26 February 2018 - US-based coal producer and marketer Alliance Resource Partners, L.P. (NASDAQ: ARLP) and master limited partnership Alliance Holdings GP, L.P. (NASDAQ: AHGP) have inked an agreement designed to simplify corporate structure, the companies said,

Alliance Holdings GP was formed to own and control ARLP's managing general partner through which it holds a non-economic general partner interest in ARLP and an approximate 1% general partner interest in ARLP's operating subsidiary Alliance Resource Operating Partners, L.P. In addition, AHGP owns 87,188,338 common units of ARLP.

Under the deal, AHGP would become a wholly owned subsidiary of ARLP and all of the ARLP common units held by AHGP and its subsidiaries would be distributed to the unitholders of AHGP in exchange for their AHGP common units.

These simplification transactions also contemplate that ARLP will issue ARLP common units in exchange for the 1.0001% general partner interest in Alliance Resource Operating Partners, L.P. and the 0.001% managing membership interest in Alliance Coal, LLC.

The number of ARLP common units issued in exchange for these interests will be calculated based on ARLP's last quarterly unitholder distribution prior to the closing of the simplification transactions and will provide the same cash flow from distributions attributable to the newly issued units after the exchange as would have been paid to the interests if not for the exchange.

Based on ARLP's last quarterly distribution of USD 0.51 per ARLP common unit, ARLP would issue in exchange for these interests approximately 1,320,377 ARLP common units upon closing of the simplification transaction.

Upon the consummation of the simplification transactions, all of the outstanding AHGP common units will be canceled and cease to be publicly traded.

The simplification transactions are structured such that each AHGP unitholder will hold directly after the transactions the same economic share of ARLP and its subsidiaries that it held indirectly through AHGP before the transactions.

The simplification transactions are intended to simplify the organisational structure of the Alliance Partnerships, increase investor transparency, attract a broader investor base to a single, larger entity with increased public float and greater liquidity and eliminate the duplicative costs required to maintain two public companies.

The terms of the agreement were approved by both the board of directors of AHGP's general partner and ARLP's general partner.

Vinson and Elkins LLP served as legal advisor in connection with the transactions.

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Publication:M2 EquityBites (EQB)
Date:Feb 26, 2018
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