Item 1.01 Entry into a Material Definitive Agreement.
Indenture and Senior Notes
As previously disclosed, on September 15, 2017, SemGroup Corporation (the Company, we, our or
us) entered into a purchase agreement with certain of the Companys wholly-owned subsidiaries, as guarantors (the Guarantors), and Credit Suisse Securities (USA) LLC, as representative of the several initial purchasers
named therein (collectively, the Initial Purchasers), pursuant to which, on September 20, 2017, we issued and sold to the Initial Purchasers (the Offering) $300 million in aggregate principal amount of the
Companys 7.25% senior unsecured notes due 2026 (the Notes), for resale to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the Securities Act), and
to non-U.S. persons
outside the United States pursuant to Regulation S of the Securities Act.
The Notes were issued under an indenture (the Indenture) entered into on September 20, 2017 by and among the Company, the
Guarantors and Wilmington Trust, National Association, as trustee (the Trustee). The Notes are fully and unconditionally guaranteed on a senior unsecured basis by our existing subsidiaries that guarantee our revolving credit facility.
Interest on the Notes accrues at a rate of 7.25% per annum and is payable in cash semi-annually on March 15 and September 15 of each year, commencing on March 15, 2018. The Notes will mature on March 15, 2026.
Prior to March 15, 2021, we may redeem the Notes, in whole or in part, at any time at a price equal to 100% of the principal amount of
the Notes redeemed plus accrued and unpaid interest to, but not including, the redemption date and a make-whole premium. Additionally, from time to time before September 15, 2020, we may choose to redeem up to 35% of the original
principal amount of the Notes at a redemption price equal to 107.250% of the face amount thereof plus accrued and unpaid interest to, but not including, the redemption date, with the net cash proceeds that we raise in one or more equity offerings.
On or after March 15, 2021, we may redeem the Notes, in whole or in part, at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest thereon to, but not including, the redemption date if
redeemed during the twelve-month period beginning on March 15 of the years indicated below:
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Year
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Percentage
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2021
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103.625
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%
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2022
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101.813
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%
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2023 and thereafter
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100.000
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%
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Upon the occurrence of a change of control triggering event, as defined in the Indenture, each holder of the
Notes will have the right to require the Company to repurchase some or all of such holders Notes at 101% of the principal amount thereof, plus accrued and unpaid interest to, but not including, the repurchase date.
The Indenture contains customary covenants restricting our ability and the ability of our restricted subsidiaries to: (i) incur
additional indebtedness or issue certain preferred shares; (ii) pay dividends and make certain distributions, investments and other restricted payments; (iii) create certain liens; (iv) sell assets; (v) enter into transactions
with affiliates; (vi) enter into sale and lease-back transactions; (vii) merge, consolidate, sell or otherwise dispose of all or substantially all of our assets; and (viii) designate our subsidiaries as unrestricted subsidiaries under
the Indenture. These covenants are subject to a number of important limitations and exceptions, including certain provisions permitting us, subject to the satisfaction of certain conditions, to transfer assets to certain of our unrestricted
subsidiaries. Moreover, if the Notes receive an investment grade rating from Standard and Poors or Moodys Investors Service and no default has occurred and is continuing under the Indenture, many of the covenants in the Indenture will be
terminated. The Indenture also contains customary events of default. Upon an event of default under the Indenture, the Trustee or the holders of at least 25% in aggregate principal amount of the Notes then outstanding may declare all amounts
owing under the Notes to be due and payable.
The foregoing description of the Indenture is not complete and is subject to and qualified
in its entirety by reference to the full text of the Indenture, which is filed as Exhibit 4.1 to this Current Report on
Form 8-K and
is incorporated by reference herein.
2
Registration Rights Agreement
In connection with the closing of the Offering, on September 20, 2017, the Company and the Guarantors entered into a registration rights
agreement (the Registration Rights Agreement) with Credit Suisse Securities (USA) LLC, as representative of the Initial Purchasers. Under the Registration Rights Agreement, the Company and the Guarantors have agreed to file a
registration statement with the Securities and Exchange Commission so that holders of the Notes can exchange the Notes and the related guarantees for registered notes and guarantees that have substantially identical terms as the Notes and related
guarantees within 365 days after the original issuance of the Notes. In certain circumstances, the Company and the Guarantors may be required to file a shelf registration statement to cover resales of the Notes. We are required to pay additional
interest on the Notes if we fail to comply with our obligations to register the Notes and related guarantees within the specified time periods.
The foregoing description of the Registration Rights Agreement is not complete and is subject to and qualified in its entirety by reference to
the full text of the Registration Rights Agreement, which is filed as Exhibit 4.2 to this Current Report on
Form 8-K and
is incorporated by reference herein.
Relationships
Certain of the Initial Purchasers, or their respective affiliates, are lenders and/or agents under our revolving credit facility and receive
customary fees and expense reimbursement in connection therewith. The Initial Purchasers and their respective affiliates have in the past performed commercial banking, investment banking and advisory services for us from time to time for which they
have received customary fees and reimbursement of expenses and may, from time to time, engage in transactions with and perform services for us in the ordinary course of their business for which they may receive customary fees and reimbursement of
expenses.