Ferrellgas Partners, L.P. (NYSE:FGP) Files An 8-K Entry into a Material Definitive Agreement
On December 10, 2020, Ferrellgas Partners, L.P. (the “Company” or “MLP”), Ferrellgas, L.P. (“OpCo”), Ferrellgas, Inc., Ferrellgas GP II, LLC, Ferrellgas GP III, LLC, Ferrellgas Partners Finance Corp. (“Partners Finance”), and certain of their affiliates (collectively, the “Company Parties”) entered into a Transaction Support Agreement (together with all exhibits and supplements thereto, the “TSA”) with certain holders of, or investment advisors, sub-advisors, or managers of discretionary accounts that hold, claims (collectively, the “Consenting Noteholders”) arising under, derived from or based upon that certain Indenture dated as of April 13, 2010 (as amended, modified or supplemented, the “2010 Indenture”) between MLP and Partners Finance, as co-issuers, and U.S. Bank National Association, as trustee, to which the 8.625% Senior Notes due 2020 (the “2020 Notes”) were issued by MLP and Partners Finance. As of December 10, 2020, the Consenting Noteholders hold or represent, in the aggregate, approximately 74% of the outstanding amount of the 2020 Notes. Capitalized terms used but not otherwise defined in Item 1.01 of this Current Report on Form 8-K have the meanings given to them in the TSA.
The TSA sets forth (i) a restructuring process to satisfy the obligations of MLP and Partners Finance under the 2020 Notes (the “MLP Transactions”), which will be effectuated through pre-packaged voluntary cases (the “Chapter 11 Cases”) under chapter 11 of title 11 of the United States Code filed by only MLP and Partners Finance and the confirmation of a pre-packaged plan of reorganization for MLP and Partners Finance, and (ii) a refinancing process of OpCo, including but not limited to, replacement of OpCo’s existing unsecured notes due 2021, 2022 and 2023 (the “OpCo Transactions” and, together with the MLP Transactions, the “Transactions”), which will be consummated on the effective date (the “Effective Date”) of MLP’s plan of reorganization that implements the MLP Transactions (the “Plan”) and will close simultaneously with the MLP Transactions effectuated under the Plan.
Material Terms of the TSA and the Transactions
Generally, the TSA and the Transactions contemplate, among other things, the transactions and changes to the capital structure and governance of the Company Parties as described in more detail below.
to the TSA, and subject to the terms and conditions thereof, the parties thereto have agreed to support, act in good faith and take all steps reasonably necessary and desirable to implement and consummate the Transactions until the TSA is terminated. The Consenting Noteholders have agreed, among other things, (i) to forbear from taking actions with respect to any default or event of default by the Company Parties under the 2020 Indenture which arises solely as a result of the failure to make payments of the principal due on the 2020 Notes, and (ii) to vote in favor of any matter requiring approval to the extent necessary to implement the Transactions and the Plan.
Under the terms of the Plan contemplated by the TSA, (i) each holder of an allowed claim based on the 2020 Notes will receive, in full satisfaction of such claim, such holder’s pro rata share of 100% of the new Class B units issued by MLP (the “New Class B Units”); (ii) each holder of existing common units of MLP (the “Existing LP Units”) will receive or retain such holder’s pro rata share of the new Class A common units issued by MLP (the “New Class A Units”), subject to dilution by the New Class A Units issued upon conversion of the New Class B Units; (iii) any allowed secured guarantee claim on account of the guarantee of payment by MLP of the 10.00% Senior Secured First Lien Notes due 2025 co-issued by OpCo and Ferrellgas Finance Corp. (the “2025 Notes”) will not be impaired and will be reinstated; and (iv) any allowed claim on account of the pending litigation in the United States District Court for the Eastern District of Pennsylvania under the caption Eddystone Rail Company, LLC v. Bridger Logistics, LLC, et al., No. 2:17-cv-00495 (E.D. Pa) will not be impaired and will be reinstated.
Under the terms of the MLP Transactions contemplated by the TSA, (i) MLP will issue New Class A Units to all current holders of the Existing LP Units and may, upon the consent of the Required Consenting Noteholders, issue additional New Class A Units to such parties as determined at the discretion of MLP; (ii) MLP will issue 100% of the New Class B Units to the holders of the 2020 Notes; (iii) distributions to New Class A Units and New Class B Units shall be made at a ratio of no less than 6:1 in favor of the New Class B Units on an aggregate basis until holders of New Class B Units receive distributions in the aggregate amount equaling $357,000,000 (which is the outstanding principal amount of the 2020 Notes), upon which the New Class B Units will automatically be converted to New Class A Units at the applicable conversion rate set forth in the following table for the year following the Effective Date in which the conversion occurs:
In connection with the Transactions as described in the TSA, the Company Parties may also consider other balance sheet refinancing opportunities concurrent with implementing the Transactions. In addition, the Company has also engaged in confidential discussions and negotiations under Confidentiality Agreements (the “NDAs”) with certain holders (and/or investment advisors or managers of discretionary funds, accounts or other entities for such holders) of the 2020 Notes, which discussions and negotiations included, but were not limited to, potential transactions related to restructuring the obligations under the 2020 Notes.
As part of such discussions and negotiations, the Company’s management provided such holders with certain confidential information. to the NDAs, the Company agreed to publicly disclose certain information, including the information set forth in Exhibit 99.1 attached hereto (the “Cleansing Material”), upon the occurrence of certain events set forth in the NDAs.
The Cleansing Material was prepared solely to facilitate a discussion with the parties to the NDAs and was not prepared with a view toward public disclosure and should not be relied upon to make an investment decision with respect to the Company Parties. The Cleansing Material should not be regarded as an indication that the Company Parties or any third party consider the Cleansing Material to be a reliable prediction of future events, and the Cleansing Material should not be relied upon as such. Neither the Company Parties nor any third party has made or makes any representation to any person regarding the accuracy of any Cleansing Material or undertakes any obligation to publicly update the Cleansing Material to reflect circumstances existing after the date when the Cleansing Material was prepared or conveyed or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the Cleansing Material are shown to be in error. In the event any transaction occurs in the future, the terms of any such transaction may be materially different than the terms set forth in the Cleansing Material. However, no assurance can be given that any such transaction will occur at all.
The foregoing description of the Cleansing Material does not purport to be complete and is qualified in its entirety by reference to the complete materials furnished as Exhibit 99.1 attached hereto.
Cautionary Statement Regarding Forward-Looking Statements
Statements included in this Current Report on Form 8-K may constitute forward-looking statements. These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. These statements often use words such as “anticipate,” “believe,” “intend,” “plan,” “projection,” “forecast,” “strategy,” “position,” “continue,” “estimate,” “expect,” “may,” “will,” or the negative of those terms or other variations of them or comparable terminology. These statements often discuss plans, strategies, events or developments that we expect or anticipate will or may occur in the future and are based upon the beliefs and assumptions of our management and on the information currently available to them.
The successful consummation of the Transactions contemplated by the TSA are subject to various conditions, including the successful negotiation of definitive documentation and other conditions that are not within the control of the Company Parties. There can be no assurances that the Company Parties or any of their affiliates will be able to successfully negotiate or implement the Transactions contemplated by the TSA, or if they are able to do so, that such negotiation or implementation will be consistent with the terms described herein.
We continue to experience financial, business, operational and reputational risks that could materially affect our present expectations and projections. For additional information regarding known material factors that could cause our actual results to differ from those contained in or implied by forward-looking statements, please see the section entitled “Risk Factors” in the Company Parties Annual Report on Form 10-K for the year ended July 31, 2020, filed with the Securities and Exchange Commission on October 15, 2020.
You are cautioned not to place undue reliance on forward-looking statements, which are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise, except as required by law.
|10.1||Transaction Support Agreement, dated as of December 10, 2020, by and among the Company Parties (as defined therein) and the Consenting Lenders (as defined therein)|
FERRELLGAS PARTNERS L P Exhibit
EX-10.1 2 tm2038265d1_ex10-1.htm EXHIBIT 10.1 Exhibit 10.1 EXECUTION VERSION THIS TRANSACTION SUPPORT AGREEMENT IS NOT AN OFFER OR ACCEPTANCE WITH RESPECT TO ANY SECURITIES OR A SOLICITATION OF ACCEPTANCES OF A CHAPTER 11 PLAN WITHIN THE MEANING OF SECTION 1125 OF THE BANKRUPTCY CODE. ANY SUCH OFFER WILL COMPLY WITH ALL APPLICABLE SECURITIES LAWS AND/OR PROVISIONS OF THE BANKRUPTCY CODE. NOTHING CONTAINED IN THIS TRANSACTION SUPPORT AGREEMENT SHALL BE AN ADMISSION OF FACT OR LIABILITY OR,…
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About Ferrellgas Partners, L.P. (NYSE:FGP)
Ferrellgas Partners, L.P. is engaged in the retail distribution of propane and related equipment sales, and midstream operations, which include crude oil logistics. The Company’s segments include propane and related equipment sales, midstream operations-crude oil logistics, and corporate and other. The propane and related equipment sales segment consists of the distribution of propane and related equipment and supplies. The midstream operations-crude oil logistics segment is engaged in providing crude oil transportation and logistics services. The corporate and other segment includes midstream operations-water solutions. The Company’s two subsidiaries include Ferrellgas Partners Finance Corp. and the operating partnership. Its general partner performs all management functions for the Company and holds general partner interest in Ferrellgas Partners and the operating partnership. It is a distributor of propane and related equipment and supplies to customers in the United States.