SemGroup files amended plan based on producers' claim settlement

By Caroline Salls

Pittsburgh, Sept. 22 - SemGroup, LP filed an amended plan of reorganization Tuesday with the U.S. Bankruptcy Court for the District of Delaware that includes a settlement that resolves producers' litigation claims.

Specifically, SemGroup said the parties to the settlement include the company, its pre-bankruptcy lenders, official producers committee and official committee of unsecured creditors.

As part of the settlement, the company said the pre-bankruptcy lenders' allotment of new common stock will be reduced to 95% to provide up to 5% of the new common stock to the holders of senior notes claims and general unsecured claims.

As a result of the settlement, the holders of the producers' claims have now agreed to support the plan.

According to the amended disclosure statement, SemGroup has agreed to pay $172.5 million to holders of first purchaser producer 20-day claims and $154 million to holders of "other 20-day claims" under the settlement.

Creditor treatment

Creditor treatment under the amended plan of reorganization includes:

• Holders of administrative expense claims, post-bankruptcy financing claims, other secured claims, priority tax claims and non-priority tax claims will recover 100% in cash;

• Holders of pre-bankruptcy lender claims will receive $524 million in cash, down from $529 million under the previous plan, 95% of the new common stock and 60% of litigation trust interests;

• The producers' representative will receive a cash payment of $172.5 million for distribution to holders of producers' claims. These creditors will not be entitled to any other payments from the company's pre-bankruptcy lenders except distributions payable to holders of unsecured first purchaser producer claims as holders of general unsecured claims;

• Holders of secured first purchaser producer claims will receive a share of $47 million in cash, minus the amount of fees and expenses claims and other specified amounts;

• Holders of first purchaser 20-day claims will receive 100% of the total amount of these claims against the debtors other than Eaglwing, plus the payment of 65% of the Eaglwing claims up to $125.5 million;

• Holders of secured working capital lender claims will receive their share of $431 million of lender cash, 23.31 million shares of new common stock and 58%, or $174 million, of the new term notes. These creditors will also receive a share of specified distributions after the plan effective date;

• Holders of secured revolver/term lender claims will receive their share of $99 million of lender cash, 16.02 million shares of new common stock and 42%, or $126 million, of the new term notes for an estimated 73.3% recovery. These creditors will also receive a share of specified distributions after the plan effective date;

• Holders of the White Cliffs credit agreement claim will be paid in full. The White Cliffs credit agreement will be amended, extended or refinanced;

• Holders of senior notes claims' recovery will be based on whether they vote to accept or reject the plan. If the class votes to accept the plan, claim holders will receive their share of new common stock, warrants and litigation trust interests for an estimated 8.34% recovery.

If the class votes to reject the plan, then claim holders will receive fewer shares of new common stock and litigation trust interests and no warrants.

However, if either the general unsecured creditors or holders of senior note claims vote to reject the plan, but the other votes to accept it, the accepting class will receive the shares of new common stock and warrants that would have been distributed to the rejecting class;

• Holders of lender deficiency claims will receive 60% of the litigation trust interests.

In addition, if the holders of the senior notes claims or general unsecured claims vote to reject the plan, holders of allowed lender deficiency claims will receive the shares of new common stock that would have been distributed to those classes;

• Holders of general unsecured claims will receive new common stock, warrants and litigation trust interests for an estimated 2.91% recovery if they vote to accept the plan.

If they reject the plan, they will receive litigation trust interests, fewer shares of common stock and no warrants;

• Holders of intercompany claims will receive their share of new common stock that they would have received if their claim were a general unsecured claim; and

• Holders of SemGroup equity interests will receive no distribution under the plan.

SemGroup, a Tulsa, Okla., privately held limited partnership that provides midstream services to North America's energy industry, filed for bankruptcy on July 22, 2008. Its Chapter 11 case number is 08-11525.

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