SemGroup Provides Update on Reorganization
At a meeting of creditors today, SemGroup, L.P. provided a list of accomplishments it has made since the company and certain of its North American subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code on July 22, 2008.
“This is a large and complex reorganization, yet we are making remarkable progress toward our ultimate goal of either selling or restructuring our assets for the benefit of our creditors,” said Lisa Donahue, SemGroup chief restructuring officer. “There is a great deal left to be done, but we have come a long way in the seven weeks since we initiated the reorganization.”
SemGroup’s accomplishments to date include:
— Securing court approval for an interim $150 million debtor-in-possession (DIP) financing. A final hearing is pending for approval of the full $250 million requested DIP loan. The company has been using the DIP as collateral for letters of credit to ensure continuing supplies from vendors. The company has posted approximately $70 million of post-petition letters of credit so far. The company has been funding operations with cash flow generated from its businesses.
— Identifying, reviewing and analyzing a first wave of unprofitable contracts and filing a motion with the Bankruptcy Court to reject the contracts;
— Ongoing funding and construction of its White Cliffs pipeline, to be completed on or about December 1, 2008. The 580-mile pipeline will transport crude oil from Platteville, Colo., to a large storage facility in Cushing, Okla.;
— Ongoing funding and construction of its crude oil storage tanks in Cushing;
— Completing negotiations, with its joint-venture partner, for funding and continued construction of its natural gas storage facility at Wyckoff, N.Y.
— Completing negotiations of a settlement with its public partner, SemGroup Energy Partners, L.P., on agreements related to throughout, storage, terminalling and adequate assurance; and
— Commencing, with its advisers, the marketing of several of its business units.
SemGroup is also developing an extensive business plan to identify which assets will be sold and which could be reorganized and remain under SemGroup’s ownership.
At the meeting of creditors, SemGroup reported that it currently has $400 million in cash, a majority of which will be used to purchase energy products for subsequent sale. “We plan to use these funds to operate our business units as profitably as possible so that we maximize their value in a sale or as ongoing operations,” said Terry Ronan, SemGroup acting president and chief executive officer.
SemGroup, L.P. is a midstream service company providing the energy industry means to move products from the wellhead to the wholesale marketplace. SemGroup provides diversified services for end users and consumers of crude oil, natural gas, natural gas liquids, refined products and asphalt. Services include purchasing, selling, processing, transporting, terminalling and storing energy. SemGroup serves customers in the United States, Canada, Mexico, Wales, Switzerland and Vietnam.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about SemGroup’s activities. Words such as “believe,”"anticipates,”"expects,” and similar language are intended to identify such forward-looking statements. The statements are based upon management’s current expectations, estimates and projections. They are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond the Company’s control and are difficult to predict. Among the factors that could cause actual results to differ materially from those expressed or forecasted in any such forward-looking statements are the Company’s ability to secure approval for the full $250 million Debtor-in-Possession financing (DIP); its ability to sell or restructure its assets for the benefit of its creditors; its ability to complete the sale of any or all of its assets; its ability to complete financial forecasts or an extensive business plan to identify which assets will be sold and which will be reorganized and remain under SemGroup’s ownership; its ability to operate its business units profitably; and its ability to maximize value for creditors. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, SemGroup undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.