By: Matt Rego
Bankrupt energy company, Breitburn Energy Partners LP (OTC Pink: BBEPQ) saw shares decline 15% within the first hour of trading May 31, 2016 based on no news. Over 2.12 million shares have exchanged hands early on in the trading session or dollar volumes of around $183,000.
Breitburn Energy Partners LP (OTC Pink: BBEPQ) is a newcomer to the OTC markets after being kicked off of the Nasdaq exchange for not meeting requirements. In addition, the energy company filed an 8-K form detailing of a Debtor-in-Possession Credit Agreement. Here is an overview of the 8-K that was filed on May 26, 2016:
Form 8-K for BREITBURN ENERGY PARTNERS LP
Item 1.01 Entry into a Material Definitive Agreement.
Debtor-in-Possession Credit Facility
As previously reported, on May 15, 2016, Breitburn Energy Partners LP (the “Partnership”) and certain of its affiliates (such affiliates, together with the Partnership, the “Debtors”) filed voluntary petitions for relief (and the cases commenced thereby, the “Chapter 11 Cases”) under chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). The Debtors filed a motion with the Bankruptcy Court seeking to jointly administer the Chapter 11 Cases under the caption “In re Breitburn Energy Partners LP, et al.”
On May 23, 2016, in connection with the Chapter 11 Cases, a Debtor-in-Possession Credit Facility (the “DIP Credit Facility”) was entered into among Breitburn Operating LP, a wholly owned subsidiary of the Partnership, as borrower (the “DIP Borrower”), the lenders party thereto (the “DIP Lenders”) and Wells Fargo, National Association, as administrative agent. The other Debtors have guaranteed all obligations under the DIP Credit Facility.
Pursuant to the terms of the DIP Credit Facility, the DIP Lenders will make available a revolving credit facility in an aggregate principal amount of $75 million (and the DIP Lenders have offered to arrange an additional $75 million of financing under the DIP Credit Facility at the DIP Borrower’s request), which includes a letter of credit facility available for the issuance of letters of credit in an aggregate principal amount not to exceed a sublimit of $50 million, and a swing line facility in an aggregate principal amount not to exceed a sublimit of $5 million, in each case, to mature on the earlier to occur of (A) the effective date of a plan of reorganization in the Chapter 11 Cases or (B) the stated maturity of the DIP Credit Facility of January 15, 2017. In addition, the maturity date may be accelerated upon the occurrence of certain events as set forth in the DIP Credit Facility.
The proceeds of the DIP Credit Facility may be used: (i) to pay the costs and expenses of administering the Chapter 11 Cases, (ii) to fund the Debtors’ working capital needs, capital improvements, and other general corporate purposes, in each case, in accordance with an agreed budget and (iii) to provide adequate protection to existing secured creditors.
The foregoing description of the DIP Credit Facility does not purport to be complete and is qualified in its entirety by reference to the Debtor-in-Possession Credit Agreement, which is filed as Exhibit 10.1 hereto, and which is incorporated herein by reference.