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NGL Energy Partners LP Announces Investment From Funds Managed by Oaktree Capital Management, L.P., Declares Quarterly Cash Distribution and Provides Partnership Update


NGL Energy Partners LP (NGL) (the "Partnership" or “NGL”) today announced several strategic actions along with updated guidance. The Partnership:

  • Announces $200 million private placement of 10.75% Class A Convertible Preferred Units and formation of a strategic relationship with funds managed by Oaktree Capital Management L.P. (“Oaktree”);
  • Declares a temporary reduction in quarterly cash distribution to $0.39 per common unit ($1.56 per common unit annualized) which will generate an additional $170 million of coverage over the next year;
  • Updates guidance for Fiscal Year 2016 and initiates projections for Fiscal Year 2017, as well as an update on the Grand Mesa project;
  • Reports enhanced liquidity and balance sheet since December 2015 with the sales of Class A Convertible Preferred Units, interests in TransMontaigne GP LLC and common units of TransMontaigne Partners L.P. and senior note repurchases resulting in the ability to fund growth projects while also significantly reducing outstanding debt; and
  • Will host an analyst and investor call with Management scheduled for 11:00am EDT on Friday, April 22, 2016

Class A Convertible Preferred Units

The Partnership has entered into an agreement to issue $200 million of 10.75% Class A Convertible Preferred Units ("Preferred Units") to Oaktree. Oaktree will acquire 16.6 million Preferred Units at a price of $12.03 per unit as well as 3.6 million warrants, which are subject to certain vesting and exercise terms. NGL expects to use the net proceeds from the issuance of the Preferred Units to repay borrowings outstanding on its revolving credit facility, which may be re-borrowed in the future to fund capital expenditures and for other general partnership purposes. The Partnership and Oaktree have also formed a strategic relationship to pursue future opportunities within the Partnership’s current business segments.

“I believe this is a very positive transaction for NGL and I look forward to having Oaktree as a partner and represented on our Board. The investment by Oaktree is a strong endorsement of our business model, strategy and future growth projects. We plan to jointly pursue certain attractive assets together that Oaktree will assist in financing/structuring and NGL will operate,” stated Mike Krimbill, CEO of NGL. “Over the past several months, NGL has taken what I believe to be the necessary actions to position the Partnership for success, regardless of this low commodity price environment. In only five months since our joint ownership arrangement regarding the Saddlehorn pipeline, we have significantly enhanced liquidity, strengthened the balance sheet and aligned with a strategic investor which we expect will provide us with the capital to selectively pursue organic growth projects and strategic acquisitions at accretive multiples.”

“Oaktree is pleased to make an investment in NGL. The Partnership’s strong management team, diversified asset base, attractive growth prospects and improved balance sheet, make it an exciting investment opportunity. We look forward to partnering with the NGL team to continue to implement the Partnership’s strategy and capitalize on growth opportunities in the future,” said Managing Director and Co-Portfolio Manager of Oaktree’s Infrastructure Investing strategy Chris Beall.

Closing of the sale of the Preferred Units and warrants is scheduled to occur prior to the end of June 2016, and is subject to certain closing conditions.

Quarterly Distribution

The Board of Directors of the Partnership's general partner decided to reduce the distribution 39% and declared a quarterly cash distribution of $0.39 per common unit ($1.56 per common unit on an annualized basis) for the quarter ended March 31, 2016, which it anticipates will continue for three additional quarters under current market conditions. In light of continued illiquid and unattractive debt and equity capital market...