Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
Issuance of Senior Notes
On January 30, 2017, Ferrellgas Partners, L.P. (the “Partnership”) and Ferrellgas Partners Finance Corp. (“Finance Corp.” and together with the Partnership, collectively, the “Issuers”) issued and sold $175,000,000 aggregate principal amount of the Issuers’ 8⅝% Senior Notes due 2020 (the “Notes”) in a private offering. The Notes were issued at a price of 96.0% of par, plus accrued interest from December 15, 2016. Ferrellgas Partners, L.P. and Ferrellgas Partners Finance Corp. received net proceeds from the offering of approximately $164.2 million, after deducting the initial purchasers’ discount and expenses of the offering. The Partnership used the net proceeds from the offering to repay borrowings under the secured credit agreement, dated as of November 2, 2009 (as amended, the “Credit Facility”), of Ferrellgas, L.P., the Company’s operating partnership (the, “Operating Partnership”).
The Notes constitute a further issuance of the Issuers’ 8⅝% Senior Notes due 2020 (the “8⅝% Senior Notes”) first issued on April 13, 2010, of which $182 million aggregate principal amount was outstanding prior to the issuance of the Notes. Following the issuance of the Notes, the Issuers have outstanding $357 million aggregate principal amount of the 8⅝% Senior Notes.
The Notes will mature on June 15, 2020, and interest on the Notes is payable semi-annually in cash in arrears on June 15 and December 15 of each year, commencing on June 15, 2017, at a rate of 8.625% per annum. Interest on the Notes will accrue from December 15, 2016. The Notes are general unsecured joint obligations of the Issuers, ranking equally with all other existing and future unsecured and unsubordinated indebtedness of the Issuers. The terms of the 8⅝% Senior Notes are more fully described under the heading “Description of Notes” in the Prospectus Supplement dated March 31, 2010 (the “Prospectus Supplement”) filed by the Issuers with the Securities and Exchange Commission (the “SEC”) on April 1, 2010, which description is incorporated herein by reference.
The Notes constitute a single series of securities with the previously issued 8⅝% Senior Notes for all purposes under the Indenture referred to below and have the same terms as those of the previously issued 8⅝% Senior Notes, except that:
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the Notes have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and therefore are subject to certain restrictions on transfer;
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the Notes have the benefit of the Registration Rights Agreement referred to below;
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interest will accrue on the Notes from and including December 15, 2016, the most recent interest payment for the previously issued 8⅝% Senior Notes, and the first interest payment date for the Notes will be June 15, 2017;
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the Notes were issued with original issue discount (OID) for U.S. federal income tax purposes; and
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the Notes have different CUSIP numbers from that of the previously issued 8⅝% Senior Notes and will not be fungible with the previously issued 8⅝% Senior Notes at any time.
The Notes have not been registered under the Securities Act or any state securities laws and, absent such registration, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. This Current Report on Form 8-K does not constitute an offer to sell or a solicitation of an offer to buy any securities.
Purchase Agreement
The Issuers sold the Notes pursuant to a Purchase Agreement dated January 24, 2017 (the “Purchase Agreement”) among the Issuers, the Operating Partnership, Ferrellgas, Inc., the general partner of the Partnership and the Operating Partnership (together with the Issuers and the Operating Partnership, the “Ferrellgas Parties”), and the initial purchasers named therein. The Purchase Agreement contains customary representations, warranties and agreements of the Ferrellgas Parties, customary indemnification obligations of the
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