Anchors Comprehensive Plan to Materially Enhance Liquidity,
Visibility, and Strategic Capability
-
Investment consists of $350 million of perpetual convertible preferred
equity and $650 million of senior secured notes
-
Amending credit facility to reset borrowing base at $1.8 billion
through April 2016
-
Resetting common unit distribution at $0.50 per unit on an annualized
basis
-
Adding Kurt Talbot, Vice Chairman of EIG, to Breitburn’s Board of
Directors
LOS ANGELES -- (Business Wire)
Breitburn Energy Partners LP (NASDAQ:BBEP) and EIG Global Energy
Partners (“EIG”) today announced definitive agreements whereby Breitburn
will sell $350 million of perpetual convertible preferred units and $650
million of senior secured notes in simultaneous private offerings to
investment funds managed by EIG, and other purchasers. These offerings
are expected to close on April 8, 2015, subject to the approval of an
amendment to Breitburn’s senior credit facility and satisfaction of
other customary closing conditions.
“We are pleased that EIG, a preeminent, global, energy-focused
investment firm, has decided to make a sizable strategic investment in
Breitburn. We view the investment as an endorsement of the quality of
our diversified asset portfolio and future growth prospects,” said Hal
Washburn, Chief Executive Officer of Breitburn. “The series of actions
announced today bolster our financial flexibility and align us with an
experienced energy investor partner to help execute our vision and avail
ourselves of strategic opportunities as they arise. This transaction
provides valuable pro forma excess liquidity for Breitburn and gives us
the ability to opportunistically pursue strategic acquisitions in the
current depressed commodity price environment. Through our 27-year
history, we have emerged from each prior downturn a much stronger
company, and we expect to continue this track record.”
“We are excited to partner with a management team for whom we have great
respect,” said R. Blair Thomas, Chief Executive Officer of EIG. “We will
work with Breitburn with the goal of creating significant value and
distribution growth for unitholders given the substantial liquidity our
investment will provide and the growth opportunities available in the
current market environment.”
The Series B Perpetual Convertible Preferred Units (“Series B Preferred
Units”) will be issued at a price of $7.50, representing a premium of
approximately 27% to Breitburn’s common unit closing price on March 27,
2015. The Series B Preferred Units will pay monthly distributions at a
rate equal to 8% per annum, payable in cash or additional Series B
Preferred Units at Breitburn’s option for the first three years, and in
cash thereafter. After three years, the Series B Preferred Units will be
convertible at the option of the holder, and earlier in certain limited
circumstances. After three years, the Series B Preferred Units will be
convertible by Breitburn under certain circumstances. The Series B
Preferred Units will vote on an as-converted basis with Breitburn’s
common units and will have certain other class voting rights. At close,
the Series B Preferred Units will have a combined voting interest of
approximately 18%.
The Senior Secured Notes due May 2020 (the “Senior Notes”) will pay
interest at the rate of 9.25% per annum. The Senior Notes will be
secured on a second-priority basis and be effectively subordinated to
the extent of the value of the collateral to Breitburn’s credit
facility. The Senior Notes will be effectively senior to Breitburn's
existing 2020 senior notes and 2022 senior notes and any existing and
future unsecured indebtedness to the extent of the value of the
collateral securing the Senior Notes. The Senior Notes are not callable
prior to the third anniversary of the closing date, other than at a
customary make-whole premium, and are callable at par beginning on the
fourth anniversary of the closing date. The Senior Notes do not include
any financial maintenance covenants.
Breitburn expects to use the net proceeds from the private offerings of
approximately $938 million to repay borrowings under its credit
facility, resulting in net borrowings, at closing, of approximately
$1.24 billion.
In conjunction with the private offerings, Breitburn is amending its
credit facility to allow for the issuance of the Senior Notes and to
establish a revised borrowing base of $1.8 billion through April 2016,
subject to limited exceptions.
Simultaneously, Breitburn announced that it intends to reduce its common
distribution to $0.50 per unit on an annualized basis in conjunction
with these private offerings. This lower distribution rate is part of an
overall plan to increase Breitburn’s liquidity and strategic flexibility
for a potentially prolonged market downturn.
“This distribution reduction is a very difficult, but prudent
undertaking and an important component of our comprehensive liquidity,
cash flow, and value management strategy,” indicated Mr. Washburn. “We
have spent the better part of the past four months carefully examining
our playbook and rewriting it to deliver the highest unitholder value
over the medium to long-term. The steps that we have outlined today,
along with additional actions underway including meaningful reductions
to our operating expenses and G&A, will substantially increase our
distribution coverage and better position us for long-term value
creation, as we believe we can reinvest this additional liquidity at
higher rates of return in the current environment.”
Breitburn has agreed to appoint Kurt Talbot to its Board of Directors
upon completion of the financing transactions with EIG.
Jefferies LLC is serving as lead placement agent and sole financial
advisor to Breitburn and Credit Suisse is serving as financial advisor
to EIG.
The securities offered in the private placement have not been registered
under the Securities Act of 1933, as amended (the “Securities Act”), or
any state securities laws and may not be offered or sold in the United
States absent registration or an applicable exemption from registration
requirements of the Securities Act and applicable state laws.
This press release shall not constitute an offer to sell or a
solicitation of an offer to buy the securities described herein.
Kurt Talbot
Mr. Talbot is the Vice Chairman and Co-Head of the Investment Committee
of EIG. From 2007 through 2014, Mr. Talbot was the Chief Investment
Officer for EIG, having primary responsibility for the group’s global
investment activity. Mr. Talbot first joined EIG in 1990 and played an
integral role in the success of EIG’s oil and gas practice. In 2003, Mr.
Talbot left EIG and joined Goldman Sachs Group, Inc., where he founded
and served as head of its E&P Capital Group. In 2005, Mr. Talbot
returned to EIG as Managing Director and Head of Oil and Gas. Mr. Talbot
began his professional career with Trafalgar House Oil & Gas, a British
independent, holding both engineering and commercial positions in
Houston and London, respectively. Mr. Talbot received a B.S. in
Petroleum Engineering from Louisiana State University and an M.B.A. from
Texas A&M University. Mr. Talbot is a registered professional engineer
in the State of Texas.
About Breitburn Energy Partners LP
Breitburn Energy Partners LP is a publicly traded independent oil and
gas master limited partnership focused on the acquisition, development,
and production of oil and gas properties throughout the United States.
Breitburn’s producing and non-producing crude oil and natural gas
reserves are located in the following seven producing areas: the Permian
Basin, Michigan/Indiana/Kentucky, Ark-La-Tex, the Mid-Continent, the
Rockies, Florida, and California. See www.breitburn.com
for more information.
About EIG
EIG is a leading institutional investor to the global energy sector with
$14.2 billion under management as of December 31, 2014. EIG specializes
in private investments in energy and energy-related infrastructure on a
global basis. During its 33-year history, EIG has invested over $18.5
billion in the sector through more than 300 projects or companies in 35
countries on six continents. EIG’s clients include many of the leading
pension plans, insurance companies, endowments, foundations and
sovereign wealth funds in the U.S., Asia and Europe. EIG is
headquartered in Washington, D.C. with offices in Houston, London,
Sydney, Rio de Janeiro, Hong Kong and Seoul.
Cautionary Statement Regarding Forward-Looking
Information
This press release contains forward-looking statements. All statements,
other than statements of historical facts, included in this press
release that address activities, events or developments that Breitburn
expects, believes or anticipates will or may occur in the future are
forward-looking statements, including our expectation that the credit
facility will be amended and that the closing of the sale of the
preferred equity and the senior secured notes will occur. The closing of
the sale of the preferred equity and the senior secured notes are
conditioned on both transactions closing simultaneously and on the
satisfaction of conditions, including conditions that may be out of
Breitburn’s control. Accordingly, there is risk that the closings may
not occur. Our forward-looking statements are based on certain
assumptions made by Breitburn based on management’s experience and
perception of historical trends, current conditions, anticipated future
developments and other factors believed to be appropriate. Such
statements are not guarantees of future performance and are subject to
certain risks, uncertainties and other factors, some of which are beyond
our control and are difficult to predict, including those which are set
forth under the heading “Risk Factors” in our Annual Report on Form 10-K
filed with the Securities and Exchange Commission, and if applicable,
our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K.
BBEP-IR
Photos/Multimedia Gallery Available: http://www.businesswire.com/multimedia/home/20150329005029/en/
Contacts:
Breitburn Energy Partners LP
Antonio D’Amico
Vice President,
Investor Relations & Government Affairs
or
Jessica Tang
Investor
Relations Manager
(213) 225-0390
Source: Breitburn Energy Partners LP
© 2024 Canjex Publishing Ltd. All rights reserved.