SemGroup aims to exit bankruptcy soon with reorganization plan changes

By Jennifer Lanning Drey

Portland, Ore., Aug. 25 - SemGroup, LP filed an amended plan of reorganization Tuesday with the U.S. Bankruptcy Court for the District of Delaware that is intended to allow the company to obtain confirmation and exit Chapter 11 before the conclusion of ongoing litigation between its pre-bankruptcy lenders and oil and gas producer creditors.

Under the terms of the amended plan, the company is offering opt-in cash settlements to holders of some disputed claims.

The opt-in proposal provides the opportunity for more cash to be distributed to more creditors, SemGroup said.

Holders of producer secured claims can now receive a full cash recovery.

Under the previous plan, holders of producer secured claims were slated to receive a share of any producer cash and producer preferred distribution rights.

The amended plan also changes the estimated amount of lender cash to be distributed for holders of working capital lender claims to $430 million from $452 million.

Additionally, the amount of lender cash to be distributed to holders of secured revolver/term lender claims was increased to $99 million from $74 million.

A supplemental disclosure hearing is expected on Sept. 24 and a confirmation hearing on Oct. 26.

SemGroup said it is on track to exit bankruptcy by early November.

The company also said that it expects to announce the syndication date for its $500 million exit facility shortly.

Creditor treatment

Creditor treatment under the amended plan of reorganization includes:

• Holders of administrative expense claims, post-bankruptcy financing claims, priority tax claims and non-priority tax claims will recover 100% in cash;

• Holders of producer secured claims will receive a full recovery.

• Holders of secured working capital lender claims will receive their share of $430 million of lender cash, 23.31 million shares of new common stock and 58%, or $174 million, of the new term notes for an estimated 57.1% recovery;

• Holders of secured revolver/term lender claims will receive their share of $99 million of lender cash, 16.02 million shares of new common stock and 42%, or $126 million, of the new term notes for an estimated 73.3% recovery;

• Holders of the White Cliffs credit agreement claim will be paid in full. The White Cliffs credit agreement will be amended, extended or refinanced;

• Holders of senior notes claims' recovery will be based on whether they vote to accept or reject the plan. If the class votes to accept the plan, claim holders will receive their share of new common stock, warrants and litigation trust interests for an estimated 8.34% recovery.

If the class votes to reject the plan, then claim holders will receive fewer shares of new common stock and litigation trust interests and no warrants.

However, if either the general unsecured creditors or holders of senior note claims vote to reject the plan, but the other votes to accept it, the accepting class will receive the shares of new common stock and warrants that would have been distributed to the rejecting class;

• Holders of lender deficiency claims will receive 60% of the litigation trust interests.

In addition, if the holders of the senior notes claims or general unsecured claims vote to reject the plan, holders of allowed lender deficiency claims will receive the shares of new common stock that would have been distributed to those classes;

• Holders of general unsecured claims will receive new common stock, warrants and litigation trust interests for an estimated 2.91% recovery if they vote to accept the plan.

If they reject the plan, they will receive litigation trust interests, fewer shares of common stock and no warrants;

• Holders of intercompany claims will receive their share of new common stock that they would have received if their claim were a general unsecured claim; and

• Holders of SemGroup equity interest will receive no distribution under the plan.

SemGroup, a Tulsa, Okla., privately held limited partnership that provides midstream services to North America's energy industry, filed for bankruptcy on July 22, 2008. Its Chapter 11 case number is 08-11525.

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