Suburban further extends consent date, sweetens offer for Inergy notes

By Marisa Wong

Madison, Wis., June 15 - Suburban Propane Partners, LP and Suburban Energy Finance Corp. have extended the consent date and expiration date, increased the consent payment and coupons of the new Suburban Energy notes and modified certain other terms in the consent solicitations and exchange offers for the $1.2 billion principal amount of 7% senior notes due 2018 and 6 7/8% senior notes due 2021 issued by Inergy, LP and Inergy Finance Corp.

The consent deadline has been extended to 5 p.m. ET on June 21 from 5 p.m. ET on June 14, according to an 8-K filed Friday by Suburban Propane with the Securities and Exchange Commission.

The consent deadline was originally set for May 16 and was extended to May 18, May 23, May 31, June 7 and, most recently, to June 14.

The Suburban companies are now offering to pay a total of $50 million in cash to holders who deliver consents by the deadline. The total consent payment was previously set at $30 million.

Assuming that consents are delivered for all $1.2 billion of the Inergy notes, the cash consent payment will be $41.67, up from $25.00, per $1,000 principal amount. Assuming that consents are delivered for $1 billion of the notes, the premium will be $50, up from $30, per $1,000 of notes.

Suburban originally offered to pay a cash consent fee of $3.75 per $1,000 principal amount of notes.

As of June 14, about 34% of the outstanding principle amount of Inergy notes had been tendered. Holders may no longer withdraw tendered notes.

Suburban previously said it may lower the minimum tender condition requiring tenders for at least $1 billion of notes. In a news release on Friday, Suburban said it continues to reserve the right to lower the minimum tender condition.

Suburban is soliciting consents to amend the Inergy notes to delete all of the restrictive covenants, modify the covenants regarding mergers and consolidations and eliminate events of default. The amendments require the consent of a majority of holders of the outstanding principal amount of each series of Inergy notes.

Exchange offers

The companies are now offering $1 billion principal amount of new 7¼% senior notes due 2018 and 7 1/8% senior notes due 2021 issued by Suburban Energy plus $200 million in cash in exchange for tendered Inergy notes. The coupon for the 2018 notes was increased from 7%, and the coupon on the 2021 notes was increased from 6 7/8%.

As noted before, each new series of notes will have substantially the same terms - except for the coupon, which has just been increased - as the corresponding series of outstanding Inergy notes for which they are being offered in exchange, including interest payment dates, optional redemption terms and maturity.

The offers are in connection with, and conditioned upon, the acquisition of Inergy's retail propane operations.

The expiration date of the exchange offers has been extended to 11:59 p.m. ET on July 6. The offers, which began on May 3, were originally set to expire at 11:59 p.m. ET on May 31.

Suburban Propane initially announced the offers on April 26. It said that it received a commitment to increase its revolving credit facility to $400 million from $250 million and that it planned on issuing $1 billion of 7% senior notes due 2018 and 6 7/8% senior notes due 2021.

Global Bondholder Services Corp. (866 387-1500 or collect 212 430-3774) is the information agent for the exchange offers.

Inergy is a Kansas City, Mo., master limited partnership with operations that include the retail marketing, sale and distribution of propane. It also operates a natural gas storage business, a liquid petroleum gas storage business, a solution-mining and salt production company and a propane supply logistics, transportation and wholesale marketing business.

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