Southcross granted confirmation of pre-packaged plan of reorganization

By Caroline Salls

Pittsburgh, April 11 – Southcross Holdings LP’s prepackaged plan of reorganization was confirmed Monday by the U.S. Bankruptcy Court for the Southern District of Texas.

Monday’s order also approved the disclosure statement for the plan.

As previously reported, some of the company’s owners agreed to provide $85 million in debtor-in-possession financing and will provide $85 million upon the effective date of the plan. Specifically, the plan sponsors are affiliates of EIG BBTS Holdings LLC and TW BBTS Aggregator LP.

In exchange for this $170 million investment, the owners will receive two-thirds of the equity of the reorganized holding company.

In addition to new equity in the reorganized company, Southcross said the sponsors will receive $8 million of unsecured notes.

General unsecured creditors, including vendors and trade creditors, are expected to be paid in full in cash or otherwise rendered unimpaired.

Creditor treatment

Treatment of creditors will include the following:

• Payment in full of all administrative and priority claims in cash at emergence;

• Conversion of the proposed DIP financing obligations to new equity;

• Reinstatement of all intercompany arrangements with the non-debtor Southcross Energy Partners entities;

• Holders of claims arising under the holding company’s revolving credit facility will receive their share of the loans arising under a new $50 million term loan A credit facility;

• Holders of claims arising under the company’s term loan will receive their share of new equity and the loans arising under a new $75 million term loan B credit facility;

• Holders of general unsecured claims will recover 100%, to be paid in cash or other treatment that leaves the claims unimpaired;

• Class B unitholders will receive their share of $100,000; and

• All existing common equity interests in Southcross Holdings and Southcross Holdings GP will be canceled.

DIP financing approved

In addition, Southcross received final court approval to use up to $85 million of debtor-in-possession financing.

Wilmington Trust, NA is the administrative agent and collateral agent for the DIP facility.

The DIP loan will mature on the earliest of six months from the bankruptcy filing date, the effective date of a Chapter 11 plan, closing of a sale of the debtors’ assets, the date the company supports in writing any plan that does not call for payment in full of the loan obligations and the date of termination of the commitments and acceleration of the DIP loan obligations.

Interest will be 10%, payable in kind.

Southcross, a Dallas-based midstream services company, filed bankruptcy on March 27. The Chapter 11 case number is 16-20111.

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