MARTIN MIDSTREAM PARTNERS L.P. (NASDAQ:MMLP) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.
Restructuring Support Agreement
On June 25, 2020, Martin Midstream Partners L.P. (the Partnership), its general partner, Martin Midstream GP LLC, and Martin Midstream Finance Corp., Martin Operating GP LLC, Martin Operating Partnership L.P., Martin Transport, Inc., Redbird Gas Storage LLC, and Talens Marine & Fuel, LLC, entered into a restructuring support agreement (the Restructuring Support Agreement) with certain holders (the Supporting Holders) that beneficially own over 62% in principal amount of the Partnerships 7.25% senior unsecured notes due 2021 (the Existing Notes), to which the Supporting Holders and the Partnership have agreed to enter into and implement a proposed debt restructuring transaction (the Restructuring Transaction) through either an exchange offer (the Exchange Offer) and a cash tender offer (the Cash Tender Offer) or through a prepackaged plan of reorganization (the Plan), subject to the terms and conditions of the Restructuring Support Agreement, including in the term sheet and the Plan attached thereto.
The Restructuring Support Agreement contemplates the following transactions:
(1) $650 in cash for each $1,000 in principal amount of Existing Notes tendered (subject, along with the Cash Tender Offer described below, to a combined cap of $77 million in aggregate principal amount of Existing Notes, and, along with the Cash Tender Offer, the Cash Offers),
(2) $1,000 in principal amount of 11.50% senior secured second lien notes due 2025 (the Exchange Notes) for each $1,000 in principal amount of Existing Notes tendered, and
(a) The right to acquire such holders pro rata share of $50 million of 10.00% senior secured 1.5 lien notes due 2024 (the New Notes, and the offer of the right to acquire such New Notes, the Rights Offering), the proceeds of which will be used to fund the Cash Offers;
(b) Holders that participate in the Rights Offering will receive Unused Proceeds (as described below) on a pro rata basis based on the principal amount of Existing Notes participating in the Rights Offering, and $1,000 in principal amount of Exchange Notes for each $1,000 in principal amount of such holders Existing Notes remaining after application of the Unused Proceeds; Unused Proceeds will be an amount equal to (i) the difference between $50 million and the amount of cash actually used in the Cash Offers multiplied by (ii) 0.85.
The Restructuring Support Agreement contemplates various closing conditions, including, among other things, the negotiation of definitive documentation and a minimum tender condition of 95% total in principal amount of the Existing Notes in the Exchange Offer and the Cash Tender Offer (the Minimum Participation Condition).
to the Restructuring Support Agreement, each Supporting Holder has agreed to tender its Existing Notes to the terms of the Exchange Offer, to deliver corresponding consents, and to vote to accept the Plan, which would be implemented if the Minimum Participation Condition is not satisfied. The parties to the Restructuring Support Agreement have agreed to support the consummation of the Exchange Offer and/or the Plan, the terms of which are described more fully in the Restructuring Support Agreement.
The Supporting Holders may terminate the Restructuring Support Agreement if, among other customary termination events, the Partnership files for bankruptcy other than as contemplated by the Restructuring Support Agreement or if the commencement of the Exchange Offer has not occurred by July 6, 2020.
The Partnership expects to continue the operation of its business in the ordinary course and does not anticipate interruption in its operations during the restructuring regardless of whether the Partnership conducts its restructuring in or out of the chapter 11 process. The transactions contemplated by the Restructuring Support Agreement are not intended to impact trade vendors, employees, customers, or any related contractual agreements or obligations. The Partnerships common units will remain outstanding and are not a part of the transactions contemplated by the Restructuring Support Agreement. The Partnership also expects to continue to have access to all necessary funds under its revolving credit facility, subject to the amendment of such revolving credit facility and receiving any related consents from its lenders.
The proposed Restructuring Transaction is being disclosed in this Current Report on Form 8-K for completeness of disclosure of the terms of the Restructuring Support Agreement. This report shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of any of these securities, in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The Exchange Notes and New Notes to be offered in the Exchange Offer and Rights Offering have not been registered under the Securities Act of 1933, as amended (the Securities Act), or any state securities laws, and unless so registered, may not be offered or sold in the United States or to U.S. persons except to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.
The foregoing description of the Restructuring Support Agreement, set forth in this Item 1.01, does not purport to be complete and is qualified in its entirety by reference to the text of the Restructuring Support Agreement, a copy of which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.
In connection with the Restructuring Support Agreement and subject to agreement upon mutually acceptable definitive documentation, the Supporting Holders are agreeing to purchase any unsubscribed New Notes that have not been purchased by eligible holders in the Rights Offering, or if the Exchange Offer and Cash Tender Offer are not consummated, to the Plan.
The Partnership has agreed to pay the Supporting Holders a backstop commitment fee of $3.75 million allocated among the Supporting Holders based on their pro rata shares of the backstop commitment, which commitment fee will be paid in New Notes. However, if the Restructuring Support Agreement is terminated due to the Partnerships governing body exercising its fiduciary duties, if the backstop agreement is materially breached by the Partnership and therefore terminated by the Supporting Holdings, or if the New Notes are not issued by August 17, 2020 and the Partnership has not commenced chapter 11 cases, the commitment fee will be paid in cash.
Item 7.01. Regulation FD Disclosure.
On June 26, 2020, the Partnership issued a press release in connection with its entry into the Restructuring Support Agreement. A copy of the press release is attached hereto as Exhibit 99.1.