July 21, 2008

Lenders Take Control of Trouble SemGroup Energy Partners

By Don Mecoy, The Oklahoman

Jul. 21--TULSA -- Lenders today seized control of SemGroup Energy Partners, exercising their rights under agreements with the financially troubled parent of the Tulsa energy partnership.

Manchester Securities and Alerian Capital Management exercised their rights under loans to parent company SemGroup Holdings LP to vote as the sole members of the general partner of SemGroup Energy Partners.

The investment group replaced several board members, but said they support current corporate management.

The price of SemGroup Energy's publicly traded units collapsed last week as details of the financial ills of its parent company became public. SemGroup Energy's unit price surged Monday after the company announced that the investment group had taken control.

SemGroup LP is considering bankruptcy, an equity issue or borrowing to deal with its cash situation, which apparently was prompted by some ill-fated oil hedging activities.

Alerian Managing Partner Gabriel Hammond said the investment group is banking on SemGroup Energy's hard assets, such as pipelines and storage facilities. The partnership stores and moves oil and asphalt.

"We believe strongly in the intrinsic value of the fee-based energy infrastructure assets owned by SGLP. The storage and transportation services provided by this company are an integral component of the midstream energy industry," Hammond said.

At mid-morning, the units were trading up more than $1, near the $10 level. Before last week's collapse, the units were selling for about $22.


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