Under agreements for investments, Breitburn Energy Partners LP (NASDAQ: BBEP) will sell $350 million of perpetual convertible preferred units and $650 million of senior secured notes to investment funds managed by EIG Global Energy Partners, and other purchasers. The offerings are private, the company added.
The Series B perpetual convertible preferred units are priced at $7.50 each. They will pay monthly distributions. After three years, they will be convertible by unitholders and Breitburn. They will have voting interest, the company added.
The senior secured notes due May 2020 will pay interest. They will be subordinated on the value of the credit facility collateral. Net proceeds of about $938 million will repay credit facility borrowings, resulting in about $1.24 billion in net borrowings at closing.
Los Angeles-based Breitburn is amending its credit facility so the notes can be issued. A revised borrowing base will be established—$1.8 billion through April 2016—the company added.
These offerings are scheduled to close April 8, the company said. Closing is subject to approval of an amendment to Breitburn's senior credit facility, and other closing conditions.
Jefferies LLC is lead placement agent and Breitburn’s financial adviser. Credit Suisse is EIG’s financial adviser.
Hal Washburn, Breitburn’s CEO, said Washington, D.C.-based EIG’s investment decision endorses the quality of the company’s diversified asset portfolio and financial flexibility. He added that the “transaction provides valuable pro forma excess liquidity for Breitburn and gives us the ability to opportunistically pursue strategic acquisitions in the current depressed commodity price environment.”
Breitburn operates in the Permian Basin, the Midcontinent and other U.S. areas.
The company said it will appoint Kurt Talbot to its board of directors when the transactions close. Talbot is vice chairman and co-head of EIG’s investment committee. Previously, he was chief investment officer. He first joined EIG in 1990. He has also worked for Goldman Sachs Group Inc. (NYSE: GS). He began his career with London-based Trafalgar House Oil & Gas.
Talbot has a bachelor’s degree from Louisiana State University and a master’s of business administration from Texas A&M University, and is a registered engineer in Texas.
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