Southcross Energy Partners, L.P. (NYSE:SXE) Files An 8-K Entry into a Material Definitive Agreement

Item1.01

Amendment to Third AR Revolving Credit
Agreement

On December29, 2016, Southcross Energy Partners, L.P. (the
Partnership, we, us or our) entered into a limited waiver
agreement and fifth amendment (the Amendment) to the Third
Amended and Restated Revolving Credit Agreement with Wells Fargo
Bank, N.A., UBS Securities LLC and Barclays Bank PLC and a
syndicate of lenders (as amended, the Third AR Revolving Credit
Agreement). to the Amendment, we received a full waiver for all
defaults or events of default arising out of our failure to
comply with the financial covenant to maintain a Consolidated
Total Leverage Ratio less than 5.00 to 1.00 for the quarter ended
September30, 2016.

Under the Amendment, among other things, total aggregate
commitments under the Third AR Revolving Credit Agreement were
reduced from $200 million to $145 million and the sublimit for
letters of credit was also reduced from $75 million to $50
million. Total aggregate commitments will be further reduced to
$140 million on September30, 2017, $135 million on December31,
2017, $125 million on March31, 2018, $120 million on June30, 2018
and $115 million on December31, 2018 and will also be reduced in
an amount equal to the net proceeds of any Permitted Note
Indebtedness (as defined in the Amendment) we may incur in the
future.

Borrowings under the Third AR Revolving Credit Agreement will
bear interest at the London Interbank Offered Rate or a base rate
plus an Applicable Margin (as defined in the Amendment) that
cumulatively increases to the Amendment by (i)125 basis points if
our Consolidated Total Leverage Ratio is greater than or equal to
5.00 to 1.00, plus (ii)100 basis points if our Consolidated Total
Leverage Ratio is greater than or equal to 6.00 to 1.00, plus
(iii)100 basis points if our Consolidated Total Leverage Ratio is
greater than or equal to 7.00 to 1.00, plus (iv)100 basis points
if our Consolidated Total Leverage Ratio is greater than or equal
to 8.00 to 1.00. At our election, the 100 basis point increase to
the Applicable Margin upon our Consolidated Total Leverage Ratio
being greater than or equal to 8.00 to 1.00 may be replaced with
a 150 basis point increase that is payable in kind.

The Amendment suspends the Consolidated Total Leverage Ratio (as
defined in the Amendment) and Consolidated Senior Secured
Leverage Ratio (as defined in the Amendment) financial covenants
and reduces the Consolidated Interest Coverage Ratio (as defined
in the Amendment) financial covenant requirement from 2.50 to
1.00 to 1.50 to 1.00 for all periods ending on or prior to
December31, 2018 (the ratio compliance date). Prior to the ratio
compliance date, we will also be subject to the following
covenants and restrictions:

Beginning with the fiscal quarter ending March31, 2019, our
Consolidated Total Leverage Ratio cannot exceed 5.00 to 1.00 and
our Consolidated Senior Secured Leverage Ratio cannot exceed 3.50
to 1.00.

Until such time as our Consolidated Total Leverage Ratio is less
than 5.00 to 1.00, we will also be restricted from making cash
distributions to our unitholders and from entering into
acquisition or merger agreements with third-party businesses
involving a purchase price greater than $10 million, unless such
acquisition is funded entirely using the proceeds from the
issuance of equity. In addition, until such time as our
Consolidated Total Leverage Ratio is less than or equal to 5.00
to 1.00, we will be required to repay any outstanding borrowings
under the Third AR Revolving Credit Agreement in an amount equal
to 50% of our Excess Cash Flow (as defined in the Amendment).

The foregoing description of the Amendment does not purport to be
complete and is qualified in its entirety by reference to the
full text of the Amendment, which is filed as Exhibit 10.1 to
this Current Report on Form 8-K and is incorporated into this
Item1.01 by reference.

Investment Agreement

On December29, 2016, in connection with the execution of the
Amendment, the Partnership entered into (a)an Investment
Agreement (the Investment Agreement) with Southcross Holdings LP,
the owner of our general partner (Holdings), and Wells Fargo
Bank, N.A., (b)a Backstop Commitment Letter (the Backstop
Agreement) with Holdings, Wells Fargo Bank, N.A. and the
affiliated entities of EIG Global Energy Partners, LLC and
Tailwater Capital LLC party thereto (each a Sponsor and,
collectively, the Sponsors) and (c)a First Amendment to Equity
Cure Contribution Agreement (the Equity Cure Contribution
Amendment) with Southcross Holdings. to the Equity Cure
Contribution Amendment, on December29, 2016, Holdings contributed
$17.0 million to the Partnership in exchange for approximately
11.5 million common units representing limited partner interests
in the Partnership (Common Units). The proceeds of the $17.0
million contribution will be used to pay down the outstanding
balance under the Third AR Revolving Credit Agreement and for
general corporate purposes.

In addition, to entering into the Investment Agreement, the
previous Equity Cure Contribution Agreement with Holdings
terminated and Holdings has agreed to contribute up to an
additional $15.0 million in the aggregate to the Partnership (the
Committed Amount) upon the earlier to occur of December31, 2017
and notification from the Partnership of an event of default
under the Third AR Revolving Credit Agreement. In exchange for
the amounts contributed to the Investment Agreement upon a
Partial Investment Trigger or the Full Investment Trigger (as
defined in the Investment Agreement), the Partnership will issue
to Holdings, at Holdings election, either (a)a number of Common
Units at an issue price equal to either (i)if the Common Units
are listed on a national stock exchange, 93% of the volume
weighted average price of such Common Units for the twenty day
period immediately preceding the date of the contribution or
(ii)if the Common Units are not listed on a national stock
exchange, the fair market value of such Common Units as
reasonably agreed by the Partnership and Holdings or (b)a senior
unsecured note of the Partnership in an initial face amount equal
to the amount of the contribution by Holdings (an Investment
Note). If Holdings elects to receive an Investment Note in
exchange for a contribution to the Investment Agreement, such
Investment Note will mature on or after November5, 2019 and bear
interest at a rate of 12.5%per annum payable in-kind prior to
December31, 2018 and in cash on or after December31, 2018. The
Investment Notes, if any, will be the unsecured obligation of the
Partnership subordinate in right of payment to any of the
Partnerships secured obligations under the Third AR Revolving
Credit Agreement and will contain covenants and events of default
no more restrictive than those currently provided in the Third AR
Revolving Credit Agreement.

to the Backstop Agreement, if Holdings is unable to satisfy its
obligations under the Investment Agreement with cash on hand upon
the occurrence of a Partial Investment Trigger or a Full
Investment Trigger, the Sponsors have agreed to fund Holdings
shortfall in providing the Committed Amount by contributing each
Sponsors respective pro-rata portion of the shortfall to Holdings
or, at the election of each Sponsor, directly to us. As
consideration for any amounts contributed directly to us by a
Sponsor to the Backstop Agreement, we will issue to such Sponsor
the Common Units or Investment Note that would have otherwise
been issued to Holdings under the Investment Agreement with
respect to the amount contributed by the Sponsor.

The foregoing descriptions of the Investment Agreement, the
Backstop Agreement and the Equity Cure Contribution Amendment do
not purport to be complete and are qualified in their entirety by
reference to the full text of the Investment Agreement, the
Backstop Agreement and the Equity Cure Contribution Amendment,
which are filed as Exhibit 10.2, Exhibit 10.3 and Exhibit 10.4,
respectively, to this Current Report on Form 8-K and are
incorporated into this Item1.01 by reference.

The information included in Item1.01 of this Current Report on
Form 8-K related to the Amendment is incorporated into this
Item2.03 by reference.

The information set forth in Item1.01 of this Current Report on
Form 8-K related to the Common Units issued to Holdings to the
Equity Cure Contribution Amendment and the Investment Agreement
and the Common Units which may be issued to Holdings or the
Sponsors to the Investment Agreement and the Backstop Agreement
is incorporated into this Item3.02 by reference. Any Common Units
acquired by Holdings or the Sponsors now or in the future to the
Equity Cure Contribution Amendment, the Investment Agreement and
the Backstop Agreement will be issued in a private transaction
exempt from registration under Section4(a)(2) of the Securities
Act of 1933, as amended.

(d) Exhibits

About Southcross Energy Partners, L.P. (NYSE:SXE)

Southcross Energy Partners, L.P. is a limited partnership. The Company provides natural gas gathering, processing, treating, compression and transportation services, and natural gas liquid (NGL) fractionation and transportation services. Its products include Ethane, Propane, Normal Butane, Isobutane and Natural Gasoline. The Company’s assets are located in South Texas, Mississippi and Alabama and include over four gas-processing plants, approximately two fractionation facilities and approximately 3,140 miles of pipeline. The Company’s assets in the South Texas region are located between Conroe and Webb and Dimmitt Counties near the Texas-Mexico border and include Woodsboro processing plant, Bonnie View NGL fractionation facility, and Gregory processing plant and NGL fractionation facility. The Company’s assets in the Mississippi region are located principally in the southern half of the state and consist of the intrastate pipeline system in Mississippi.

Southcross Energy Partners, L.P. (NYSE:SXE) Recent Trading Information

Southcross Energy Partners, L.P. (NYSE:SXE) closed its last trading session up +0.20 at 1.57 with 66,895 shares trading hands.