Southcross issues $15 million notes to backstop agreement sponsors

By Marisa Wong

Morgantown, W.Va., Jan. 22 – Southcross Holdings LP, the indirect owner of Southcross Energy Partners, LP’s general partner, issued $15 million of senior notes to sponsors under its backstop agreement dated Dec. 29, 2016. The sponsors include funds or accounts managed or advised by EIG Global Energy Partners and funds or accounts managed or advised by Tailwater Capital LLC.

According to an 8-K filed Monday with the Securities and Exchange Commission, a full investment trigger occurred on Dec. 31 under the investment agreement dated Dec. 29, 2016 with Wells Fargo Bank, NA, as administrative agent under the company’s third amended and restated revolving credit agreement.

Southcross Holdings delivered a backstop demand on Jan. 2 for the sponsors to fund their respective pro rata portions of a $15 million shortfall amount under the backstop agreement.

The sponsors elected to receive the contribution in the form of senior notes.

The notes mature on Nov. 5, 2019 and bear interest at 12.5%. Interest is payable in kind, provided that all interest will be payable in cash on or after Dec. 31, 2018 to the extent necessary to comply with limitations on indebtedness under the company’s third amended and restated credit agreement.

The notes will be repaid in full upon closing of American Midstream Partners’ planned acquisition of Southcross.

Southcross is a Dallas-based midstream services company.

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