SemGroup amends facility to allow $500 million construction project

By Angela McDaniels

Tacoma, Wash., April 1 – SemGroup Corp. entered into an amendment to its credit agreement on March 26 that, among other things, allows it to invest $500 million to construct, own and operate three new pipelines in the U.S. Gulf Coast region of Louisiana (the “Maurepas Pipeline Project”), according to an 8-K filing with the Securities and Exchange Commission.

In connection with the project, the amendment further amends the credit agreement as follows:

• The definitions of material project and material project EBITDA adjustment are amended to permit pre-operation EBITDA of the Maurepas Pipeline Project to be included, subject to certain limitations, in the calculations of EBITDA;

• The definition of unrestricted subsidiary is amended to provide that Maurepas Holdings, LLC, a newly formed subsidiary of the company, and its subsidiaries are unrestricted subsidiaries under the credit agreement;

• The mandatory prepayment provisions have been amended to include a mandatory prepayment in the event of certain sales or transfers of assets or equity interests associated with the Maurepas Pipeline Project;

• The reporting obligations have been amended to include certain reporting obligations in respect of the Maurepas Pipeline Project; and

• Some restrictive covenants have been amended, including limitations on the incurrence of debt, incurrence of liens, sale and leaseback transactions, investments, business activities and entry into affiliate transactions, to apply to Maurepas Holdings and its subsidiaries.

Finally, the definition of available cash was changed to permit amounts available to be drawn as working capital borrowings under the credit agreement to be included in the determination of available cash.

In connection with this change, the restricted payments covenant was amended to permit the distribution of available cash, subject to satisfaction of some conditions, and to remove the ability to distribute amounts building from consolidated net income under the definition of available amount.

Royal Bank of Scotland plc is the administrative agent and collateral agent.

Based in Tulsa, Okla., SemGroup provides transportation, distribution and marketing services to producers and refiners of petroleum products.

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