Company Creates Oil and Gas Supplier Protection Program
To Ensure Continuing Commodity Flow and Payment to Critical Suppliers
Foreign Operations and SemGroup Energy Partners Not Included in Filing
Tulsa, OK -- July 22, 2008 -- SemGroup L.P. announced that the Company and certain of its North American subsidiaries have filed voluntary petitions for reorganization today under Chapter 11 of the U.S. Bankruptcy Code as well as an application for creditor protection under the Companies’ Creditors Arrangement Act in Canada.
"Our core business in energy distribution and storage remains strong, and we are taking aggressive steps to address our financial challenge," said Terry Ronan, SemGroup’s acting President and Chief Executive Officer. "We have determined that the best way to maximize value for our creditors is to undertake a sales process that will transition our valuable businesses to well-established companies that can carry forward the mission we undertook. We believe there will be significant interest in our assets because of our talented and experienced employees, unique industry position, expansive customer base and premiere service capabilities."
Along with its voluntary petitions, SemGroup filed "first-day" motions covering employees and business operations, post-filing use of cash collateral, continuing supplier relations, customer practices, taxes and related matters, utilities and case administration matters. The Company expects to receive Court approval of its motions, including the continuation of all employee wages and benefits.
Supplier Protection Plan
As a key part of its Chapter 11 filing, privately held SemGroup created a “Supplier Protection Plan” for suppliers. Under the plan, certain suppliers who contractually commit to continue doing business with SemGroup, on the same terms as before the Chapter 11 filing, will be eligible to receive full payment, as due, for goods and services that were delivered before the filing, but for which the supplier has not yet been paid.
The Supplier Protection Program will not take effect until it has been approved by the Bankruptcy Court. The Company requested approval of the Program today.
SemGroup is in negotiations with lenders to secure sufficient debtor-in-possession (DIP) financing. The Company anticipates obtaining a DIP facility within a week.
In the interim, the Company is working with its existing bank lenders to use cash collateral which, upon Court approval, will enable SemGroup to utilize existing cash and cash generated through normal business operations to fund trade and employee obligations after the Chapter 11 filing. The Company expects to continue negotiations with its banks regarding the terms on which the banks’ interest will be adequately protected during the proceedings.
Foreign Assets and SemGroup Energy Partners Unaffected
Affiliates of SemGroup L.P. in Mexico, the United Kingdom and Asia were not included in the filing. These entities are self-funding and profitable and will continue their business operations without supervision from the U.S. Bankruptcy Court. SemGroup Energy Partners, L.P., is also not included in the Chapter 11 proceedings. SemGroup Energy Partners is a Master Limited Partnership whose units are traded on NASDAQ under the symbol SGLP.
For more information about SemGroup L.P. and the reorganization, visit www.semgroupcorp.com
SemGroup, L.P., is a midstream service company providing the energy industry the 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, terminaling 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 maximize the value of its businesses through a sales process; its ability to transition its businesses to well-established companies; the degree to which other companies, if any, will be interested in acquiring SemGroup’s assets; the Company’s ability to receive Bankruptcy Court approval of its motions, including the continuation of all employee wages and benefits and the Supplier Protection Program; the ability to secure DIP financing and/or the use of cash collateral; and the potential adverse impact of the Chapter 11 filing on the Company’s liquidity or results of operations. 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.