Download Breitburn Energy Partners LP (Form: 8

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
May 16, 2016 (May 15, 2016)
BREITBURN ENERGY PARTNERS LP
(Exact name of Registrant as specified in its charter)
Delaware
001-33055
74-3169953
(State or other jurisdiction
of incorporation or jurisdiction)
(Commission
File Number)
(IRS Employer
Identification No.)
707 Wilshire Boulevard, Suite 4600
Los Angeles, CA 90017
(Address of Principal Executive Offices)
(213) 225-5900
(Registrant’s telephone number)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.03 Bankruptcy or Receivership.
Commencement of Bankruptcy Cases
On May 15, 2016, Breitburn Energy Partners LP (the “ Partnership ”) and its affiliates listed on Exhibit 99.1 hereto (such affiliates, together
with the Partnership, the “ Debtors ”), which Exhibit is incorporated herein by reference, filed voluntary petitions for relief (collectively, the “
Petitions ” and, the cases commenced thereby, the “ Chapter 11 Cases ”) under chapter 11 of the United States Bankruptcy Code (the “
Bankruptcy Code ”) in the United States Bankruptcy Court for the Southern District of New York (the “ Bankruptcy Court ”). The Debtors
have filed a motion with the Bankruptcy Court seeking to jointly administer the Chapter 11 Cases under the caption “In re Breitburn Energy
Partners LP, et al.”
No trustee has been appointed and the Partnership will continue to manage itself and its affiliates and operate their businesses as “debtors in
possession” subject to the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and
the orders of the Bankruptcy Court. To assure ordinary course operations, the Debtors are seeking approval from the Bankruptcy Court of a
variety of “first day” motions, including motions that authorize the Debtors to maintain their existing cash management system, to secure
debtor in possession financing and other customary relief.
In connection with the Chapter 11 Cases, Breitburn Operating LP, a wholly owned subsidiary of the Partnership, expects to enter into a
Debtor-in-Possession Credit Facility (the “ DIP Credit Facility ”) as borrower (the “ DIP Borrower ”) with the lenders party thereto (the “ DIP
Lenders ”) and Wells Fargo, National Association, as administrative and collateral agent. The other Debtors will guarantee all obligations
under the DIP Credit Facility.
The Partnership expects that pursuant to the terms of the DIP Credit Facility, the DIP Lenders will make available a revolving credit facility in
an aggregate principal amount of $75 million, and the DIP Lenders have offered to arrange an additional $75 million of financing under the
DIP Credit Facility at the DIP Borrower’s request, which includes a letter of credit facility available for the issuance of letters of credit in an
aggregate principal amount not to exceed a sublimit of $50 million, and a swingline facility in an aggregate principal amount not to exceed a
sublimit of $5 million, in each case, to mature on the earlier to occur of (A) the effective date of a plan of reorganization in the Chapter 11
Cases or (B) the stated maturity of the DIP Credit Facility of January 15, 2017. In addition, the maturity date may be accelerated upon the
occurrence of certain events as set forth in the DIP Credit Facility. No assurance can be given that the DIP Credit Facility will be entered into
or as to the final terms thereof.
The proceeds of the DIP Credit Facility may be used: (i) to pay the costs and expenses of administering the Chapter 11 Cases, (ii) to fund the
Debtors’ working capital needs, capital improvements, and other general corporate purposes, in each case, in accordance with an agreed budget
and (iii) to provide adequate protection to existing secured creditors.
Item 2.04 Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement.
The commencement of the Chapter 11 Cases constitutes an event of default that accelerated the Debtors’ obligations under the following debt
documents (the “ Debt Documents ”). Any efforts to enforce such obligations under the Debt Documents are automatically stayed as a result of
the filing of the Petitions and the holders’ rights of enforcement in respect of the Debt Documents are subject to the applicable provisions of the
Bankruptcy Code.
•
$1.197 billion in unpaid principal and approximately $45.3 million of undrawn letters of credit, plus interest, fees, and other expenses
arising under or in connection with that certain Third Amended and Restated Credit Agreement, dated as of November 19, 2014, as
amended, by and among Breitburn Operating LP (“ BOLP ”), as borrower, the Partnership, the lenders party thereto and Wells Fargo
Bank, National Association, as administrative agent;
•
$650 million in unpaid principal, plus interest, fees, and other expenses, arising under or in connection with the 9.25% Senior Secured
Second Lien Notes due 2020 issued pursuant to that certain Indenture, dated as of April 8, 2015, as amended, by and among the
Partnership, BOLP and Breitburn Finance Corporation (“ BFC ”), a wholly-owned subsidiary of the Partnership, as issuers, each of
the guarantors named therein, and Delaware Trust Company, as successor indenture trustee;
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•
$305 million in unpaid principal, plus interest, fees, and other expenses, arising under or in connection with the 8.625% Senior Notes
due 2020 issued pursuant to that certain Indenture, dated as of October 6, 2010, as supplemented, by and among the Partnership and
BFC, as issuers, each of the guarantors named therein, and Wilmington Trust Company, as successor indenture trustee; and
•
$850 million in unpaid principal, plus interest, fees, and other expenses, arising under or in connection with the 7.875% Senior Notes
due 2022 issued pursuant to that certain Indenture, dated as of January 13, 2012, as supplemented, by and among the Partnership and
BFC, as issuers, each of the guarantors named therein, and Wilmington Trust Company, as successor indenture trustee.
On May 16, 2016, the Partnership issued a press release announcing the filing of the Chapter 11 Cases. A copy of the press release is attached
hereto as Exhibit 99.2 .
Forward-Looking Statements
Statements in this Current Report on Form 8-K and the exhibit filed herewith that relate to future results and events are not facts and constitute
forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are
based on the Partnership’s current expectations, estimates and assumptions and, as such, involve certain risks and uncertainties. The ability of
the Partnership to predict results or the actual effects of its plans and strategies is subject to inherent uncertainty. Actual results and events in
future periods may differ materially from those expressed or implied by these forward-looking statements because of a number of risks,
uncertainties and other factors. All statements other than statements of historical fact, including statements containing the words “intends,”
“believes,” “expects,” “will,” and similar expressions, are statements that could be deemed to be forward-looking statements. In addition, the
forward-looking statements represent the Partnership’s views as of the date as of which they were made. The Partnership anticipates that
subsequent events and developments may cause its views to change. However, although the Partnership may elect to update these
forward-looking statements at some point in the future, it specifically disclaims any obligation to do so. These forward-looking statements
should not be relied upon as representing the Partnership’s views as of any date subsequent to the date hereof. Additional factors that may
cause results to differ materially from those described in the forward-looking statements are set forth in the Partnership’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2016, which was filed with the Securities and Exchange Commission on February 26, 2016,
under the headings “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Information,” as well as subsequent reports on
Form 10-Q. Additional risks include, but are not limited to, those associated with the Partnership’s filing for relief under Chapter 11 of the
Bankruptcy Code.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
99.1
99.2
List of affiliates of the Partnership that are Debtors
Press Release dated May 16, 2016
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
BREITBURN ENERGY PARTNERS LP
Date: May 16, 2016
By:
BREITBURN GP LLC,
its general partner
By:
/s/ James G. Jackson
James G. Jackson
Chief Financial Officer
Exhibit Index
Exhibit No.
99.1
99.2
Description
List of affiliates of the Partnership that are Debtors
Press Release dated May 16, 2016
Exhibit 99.1
Debtor Affiliates
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
Breitburn Management Company LLC
Breitburn Operating GP LLC
Breitburn Operating LP
Breitburn Finance Corporation
Breitburn GP LLC
Breitburn Sawtelle LLC
Breitburn Oklahoma LLC
Phoenix Production Company
QR Energy, LP
QRE GP, LLC
QRE Operating, LLC
Breitburn Transpetco LP LLC
Breitburn Transpetco GP LLC
Transpetco Pipeline Company, L.P.
Terra Energy Company LLC
Terra Pipeline Company LLC
Breitburn Florida LLC
Mercury Michigan Company, LLC
Beaver Creek Pipeline, L.L.C.
GTG Pipeline LLC
Alamitos Company
Exhibit 99.2
Breitburn Energy Partners Commences Chapter 11 Cases to
Facilitate Balance Sheet Restructuring
Secures $75 Million in Debtor-in-Possession Financing
Discussions Will Continue With Secured and Unsecured Creditors Regarding Terms of
Expedited Balance Sheet Restructuring
Operations to Continue as Usual During Restructuring Process
LOS ANGELES, May 15, 2016 - Breitburn Energy Partners LP (Breitburn) (NASDAQ: BBEP) today announced that it
and certain of its affiliates filed voluntary petitions for relief under chapter 11 of the United States Bankruptcy Code in
the United States Bankruptcy Court for the Southern District of New York (Chapter 11 Cases). Breitburn expects to
continue its operations without interruption, and cash from its operations, cash on hand, and a $75 million
debtor-in-possession financing facility (DIP Financing Facility) will provide Breitburn with more than adequate
liquidity to fund its operations during the restructuring process. Breitburn’s DIP Financing Facility lenders have offered
to arrange an additional $75 million of DIP financing at Breitburn’s request. The Chapter 11 Cases will facilitate the
restructuring of Breitburn’s balance sheet.
During the last 30 days, Breitburn has been engaged in constructive discussions with its second lien noteholders and the
advisors to its unsecured noteholders regarding the need for, sponsorship of, and terms of a balance sheet restructuring.
Simultaneously, Breitburn has been engaged in constructive discussions with its revolving lenders regarding their
support for emergence financing, as well as the treatment of Breitburn’s valuable hedging assets in conjunction with its
emergence from the Chapter 11 Cases. Breitburn plans to utilize the Chapter 11 Cases to continue and complete these
discussions with key stakeholders and evaluate other value-maximizing opportunities to facilitate an expedited balance
sheet restructuring that will leave Breitburn as a stronger, deleveraged, and recapitalized enterprise.
Hal Washburn, Chief Executive Officer, said, “The prolonged decline in commodity prices that began in 2014 has
placed significant financial stress on today’s oil and gas industry. Our long-lived, low-decline portfolio of diverse
assets continues performing in line with our expectations, but the current outlook for commodity prices makes our
existing debt burden unsustainable. Taking this action now gives us flexibility in maximizing the value of the ongoing
business. By continuing the proactive approach we started 15 months ago and restructuring our balance sheet now, we
expect to create a stronger and more financially sound company for the benefit of all our stakeholders. During the
restructuring process, we will continue managing our business and operating our assets
as we do today. Cash from our operations, cash on hand and cash available under the DIP Financing Facility will
provide us with more than sufficient funds to operate our business during the restructuring process. We look forward to
working with our service providers, suppliers, customers, vendors, and partners to ensure that Breitburn emerges from
the restructuring process a stronger company.”
Breitburn has filed a variety of “first-day” motions with the court seeking, among other things, authority to maintain its
existing cash management system, approval of the DIP Financing Facility, authority to make payments to royalty
interest holders and with respect to its lease operating expenses, drilling and production costs, and other related
operating costs, and other customary relief. When granted, such motions will assure Breitburn’s ability to maintain
business-as-usual operations throughout the restructuring process.
Additional information, including court filings, regarding Breitburn’s restructuring is available at
https://cases.primeclerk.com/breitburn or by contacting Breitburn’s proposed notice and claims agent at 855-851-7887
(for toll-free domestic calls) and 917-258-6103 (for tolled international calls) or by email at
[email protected].
Weil, Gotshal & Manges LLP is serving as Breitburn’s legal advisor, Lazard Frères & Co. LLC is serving as
investment banker, and Alvarez and Marsal North America, LLC is serving as financial advisor.
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 Ark-La-Tex; the Midwest; the Permian Basin; the
Mid-Continent; the Rockies; the Southeast; and California. See www.breitburn.com for more information.
Cautionary Statement Regarding Forward-Looking Information
This press release contains forward-looking statements that relate to future results and events that are not facts and
constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are based on Breitburn’s current expectations, estimates and assumptions and, as
such, involve certain risks and uncertainties. The ability of Breitburn to predict results or the actual effects of its plans
and strategies is subject to inherent uncertainty. Actual results and events in future periods may differ materially from
those expressed or implied by these forward-looking statements because of a number of risks, uncertainties and other
factors. All statements other than statements of historical fact, including statements containing the words “intends,”
“believes,” “expects,” “will,” and similar expressions, are statements that could be deemed to be forward-looking
statements. In addition, the forward-looking statements represent Breitburn’s views as of the date as of which they were
made. Breitburn anticipates that subsequent events and developments
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may cause its views to change. However, although Breitburn may elect to update these forward-looking statements at
some point in the future, it specifically disclaims any obligation to do so. These forward-looking statements should not
be relied upon as representing Breitburn’s views as of any date subsequent to the date hereof. Additional factors that
may cause results to differ materially from those described in the forward-looking statements are set forth in
Breitburn’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, which was filed with the
Securities and Exchange Commission on February 26, 2016, under the headings “Risk Factors” and “Cautionary
Statement Regarding Forward-Looking Information,” as well as subsequent reports on Form 10-Q. Additional risks
include, but are not limited to, those associated with Breitburn’s filing for relief under chapter 11 of the Bankruptcy
Code.
Contacts:
Antonio D’Amico
Vice President, Investor Relations & Government Affairs
or
Jessica Tang
Investor Relations Manager
(213) 225-0390
BBEP-IR
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