Heating Oil Partners requests court approval of key employee retention plan

By Caroline Salls

Pittsburgh, Feb. 13 - Heating Oil Partners, LP requested court approval of a key employee retention plan, according to a Monday filing with the U.S. Bankruptcy Court for the District of Connecticut.

The proposed plan has two components. The first part is severance protection for four tier I employees while the second piece is a retention program which provides a stay bonus payable to 22 tier II employees. The second component also includes a discretionary payment pool.

Tier I participants are the company's four senior executive officers. They will receive severance protection in the form of a lump payment equal to their current annual salary, to be made within seven days of termination.

Tier II participants are comprised of employees who hold key posts in finance, sales and marketing, as well as the branch managers for the company's various locations.

The proposed plan provides for a payment equal to 15% of each participants' annual base salary and is payable 30% upon court approval of the plan and 70% upon the earlier of the effective date of a confirmed plan of reorganization, consummation of a sale of the company's assets or Oct. 1, 2006.

In order to qualify for the retention payments, each tier II employee must stay employed by the company until the earlier of confirmation of a plan of reorganization; the closing of a sale of substantially all of the company's assets; dismissal without cause, including as a result of conversion or dismissal of the Chapter 11 cases or the appointment of a Chapter 11 trustee; or Oct. 1, 2006.

The plan provides an additional $300,000 available to management to be used to retain employees, other than tier I employees, deemed critical to the restructuring effort.

According to the filing, the current out-of pocket cost of the plan is $657,843 including the discretionary funds for tier II employees.

The cost of the tier I severance payment ranges from $0 to $1.08 million.

Heating Oil Partners filed for Chapter 11 on Sept. 26. Its case number is 05-51271.

The residential heating oil distributor, the operating subsidiary of Toronto-based Heating Oil Partners Income Fund, also has filed in Canada under the Companies' Creditors Arrangement Act.

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