Martin Midstream extends exchange, tender offer deadlines

By Wendy Van Sickle

Columbus, Ohio, July 16 – Martin Midstream Partners LP and its subsidiary Martin Operating Partnership LP extended several deadlines in its concurrent but separate tender and exchange offers for its $364.5 million of 7¼% notes due 2021 (Cusips: 573334AD1, 573334AC3, U57363AB6 and U57363AC4) according to a Thursday news release.

The early participation date for the exchange offer and cash tender offer for the 7¼% senior unsecured notes due 2021 was extended to 5 p.m. ET on July 23 from 5 p.m. ET on July 22.

The funding date in the rights offering for certain holders of existing notes that participate in the exchange offer to acquire the issuers’ 10% senior secured 1.5 lien notes due 2024 was extended to 5 p.m. ET on July 29 from 5 p.m. ET on July 28. The expiration time of the exchange offer and cash tender offer, was extended to 5 p.m. ET on Aug. 7 from 5 p.m. ET on Aug. 6.

The expected settlement date with for the exchange offer and cash tender offer was extended to Aug. 12 from Aug. 11.

As announced on July 9, in connection with the exchange offer, the company is also soliciting votes to accept a pre-packaged plan of reorganization.

The offers are subject to participation by holders of at least 95% of the notes.

Holders of $270.7 million principal amount, or 74.3%, of the outstanding existing notes, have agreed to support the transactions, including by tendering their existing notes in the exchange offer, delivering their consents in the related consent solicitation and voting in favor of the plan as contemplated by the restructuring support agreement dated June 25.

Martin Operating entered into an amendment to its credit agreement with Royal Bank of Canada to permit consummation of the offers.

Exchange offer

Under the exchange offer, the company is offering to exchange any and all of the outstanding existing notes for a combination of cash, up to $322 million of 11½% senior secured second-lien notes due 2025 or rights to acquire up to $50 million of 10% senior secured 1.5-lien notes due 2024 at a subscription price of $137.1908.

Qualified institutional buyers, institutional accredited investors and non-U.S. persons are eligible to participate in the exchange offer.

Holders who tender their notes for exchange by the early deadline are being offered per $1,000 principal amount of existing notes $650 under the cash option; $1,000 of the 11½% second-lien notes due 2025 under the new notes option; or $1,000 principal amount of cash from excess proceeds and/or exchange notes, plus automatic exercise of the right to purchase their pro rata portion of up to $50 million of 10% 1.5-lien notes due 2024.

In order to facilitate the transactions, Martin Midstream, Martin Operating, certain subsidiaries and certain of the supporting noteholders entered into a backstop agreement under which each of the backstop parties agreed to purchase any unsubscribed new notes that have not been purchased in the rights offering as part of the exchange offer. Backstop parties will receive a backstop fee of $3.75 million, which will be paid in the form of additional new notes.

Holders who participate in the exchange offer after the early date but prior to the expiration will be eligible to receive, per $1,000 principal amount, $600 under the cash option or $950 principal amount of the 11½% second-lien notes due 2025 under the new notes option. The rights offering will not be available after the early date.

Holders will also be paid accrued interest.

If the amount of cash required to purchase all existing notes tendered under the cash option would exceed $50 million minus the cash required to purchase all notes tendered under the cash tender offer, each holder who elected that option will have the amount of existing notes it tendered for cash accepted on a pro rata basis, and the balance of existing notes each such holder tendered will be exchanged into exchange notes.

In the event that holders tender $77 million or more in principal amount of existing notes pursuant to the cash tender offer, holders electing the cash option under the exchange offer would receive no cash and would instead receive exchange notes as if they had chosen the new-notes option.

If the amount of cash consideration to be paid under the exchange offer’s cash option and the cash tender offer is less than $50 million, Martin will first purchase existing notes from each eligible holder electing the rights offering option, on a pro rata basis based upon such eligible holder’s participation in the rights offering relative to all eligible holders who participated in the rights offering, with excess proceeds at a purchase price equal to $1,000 per existing note. The balance of existing notes each such eligible holder tendered that were not accepted for purchase for cash will be exchanged into exchange notes as if that holder had chosen the new-notes option with respect to such balance of existing notes. “Excess proceeds” will be an amount equal to (i) the difference between $50 million and the total cash consideration multiplied by (ii) 0.85.

In connection with the exchange offer, the company is soliciting related consents to amend the indenture governing the existing notes, including to eliminate substantially all of the restrictive covenants and some events of default and to shorten to three business days from 30 days, the notice period required to be given to holders before a redemption.

Epiq Corporate Restructuring, LLC (Tabulation@epiqglobal.com) is the information agent, solicitation agent, exchange agent, subscription agent, and voting for the exchange offer, consent solicitation, rights offering and plan solicitation.

Plan and plan solicitation

The plan solicitation is being made to eligible holders of existing notes.

If the conditions to the exchange offer and the related consent solicitation are not satisfied or waived, but the partnership receives votes to accept the plan from holders of at least 66 2/3% in principal amount of the existing notes that cast ballots with respect to the plan and more than 50% in number of holders of existing notes that cast ballots, the partnership and its subsidiaries plan to commence Chapter 11 cases to consummate the plan.

In addition, if at any time the partnership for any reason determines that it would be advantageous, the partnership and its subsidiaries may commence Chapter 11 cases to consummate the plan.

Cash tender offer

The issuers are offering to purchase for cash up to $77 million of the existing 7¼% notes.

Holders of existing notes who are not qualified institutional buyers, not institutional accredited investors and not non-U.S. persons are eligible to participate in the cash tender offer.

For each $1,000 of notes tendered by the early deadline, the issuers are offering $650, which includes a $50 early tender premium that will not be paid to holders who participate after the early deadline.

In conjunction with the tender offer, the issuers are soliciting consents from holders eligible to participate in this offer to the proposed amendments to the existing notes indenture.

Epiq Corporate Restructuring, LLC (Tabulation@epiqglobal.com) will act as the depositary and information agent for the cash tender offer and related consent solicitation.

Martin Midstream is a Kilgore, Tex.-based company that collects, transports, stores and markets petroleum products and byproducts.

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