SemGroup Holdings lenders take control of SemGroup Energy Partners

By Caroline Salls

Pittsburgh, July 21 - SemGroup Energy Partners, LP said SemGroup Holdings, LP lenders Manchester Securities and Alerian Capital Management have acted on their rights to vote as the sole members of the general partner of SemGroup Energy.

Manchester and Alerian are still fully supportive of SemGroup's existing management, according to a news release.

According to an 8-K filed with the Securities and Exchange Commission, new controlling owners Manchester and Alerian exercised their rights on July 18 under SemGroup Holdings' credit agreement to direct the vote of all of the membership interests of the company's general partner upon an event of default.

Manchester and Alerian said they have reconstituted a five-member board of directors at SemGroup Energy's general partner to include two representatives from Manchester, one from Alerian and two existing independent directors.

Specifically, Thomas L. Kivisto, Gregory C. Wallace, Kevin L. Foxx, Michael J. Brochetti and Andy Bishop were removed from the board, according to the 8-K.

Meanwhile, Sundar S. Srinivasan, David N. Bernfeld and Gabriel Hammond were appointed as directors on the board, and Srinivasan has been elected as chairman of the board.

Brian J. Billings and Edward F. Kosnik remained as directors and will continue to be members of the conflicts committee, audit committee and compensation committee.

In addition, SemGroup Energy said in the 8-K that the change of control constituted a change of control under the general partner's long-term incentive plan, which resulted in the vesting of all awards under the plan.

The change of control also resulted in a change of control under the employment agreements of Foxx, Brochetti, Alex G. Stallings, Peter L. Schwiering and Jerry A. Parsons.

If within one year after the change of control any of these officers is terminated by the general partner without cause or the officer terminates the agreement, he will be entitled to payment of any unpaid base salary and vested benefits under any incentive plans, a lump sum payment equal to 24 months of base salary and continued participation in the welfare benefit programs for the longer of the remainder of the term of the employment agreement or one year after termination.

SemGroup Energy said Foxx, Brochetti, Stallings, Schwiering and Parsons would be entitled to lump sum payments of $900,000, $600,000, $550,000, $500,000 and $500,000, respectively, in addition to continued participation in the general partner's welfare benefit programs and the amounts of unpaid base salary and benefits under any incentive plans.

SemGroup Energy is a Tulsa, Okla., owner and operator of midstream energy assets. A subsidiary of SemGroup, LP is its general partner.

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