Ferrellgas Partners restructures finances

Ferrellgas Partners LP – with its operating partnership, Ferrellgas LP, and subsidiaries, entered into an agreement with a substantial majority of its noteholders to restructure substantially all of its debt.

To implement the Transaction Support Agreement (TSA), the parent master limited partnership, Ferrellgas Partners LP, and Ferrellgas Partners Finance Corp., which have no employees and no operations, intend to file a Chapter 11 bankruptcy case.

The operating partnership, Ferrellgas LP, will not file for Chapter 11 bankruptcy, will not be impacted by Ferrellgas Partners LP’s Chapter 11 filing, and will operate as usual throughout the financial restructuring process, according to the company.

The restructuring will permit Ferrellgas to remain an independent, employee-owned business under current management. It will not inhibit Ferrellgas’ ability to provide propane to its customers and will allow its Blue Rhino tank exchange business to continue to expand, says the company.

“Today, we are announcing great news for Ferrellgas,” says James Ferrell, chairman of the Ferrellgas board of directors, and interim president and CEO. “We have a reached an agreement with a substantial majority of our noteholders that will preserve our almost 100-year-old history and maintain ownership by our nearly 5,000 global employees. This deal will permit us to preserve and grow our enterprise as we continue to sell our products in all 50 U.S. states and Puerto Rico, while remaining a Midwest-based and employee-owned business.”

Ferrellgas will continue to satisfy all of its obligations to employees, vendors, suppliers and other partners without interruption, says the company. While operations continue as normal, pursuant to the transactions contemplated in the TSA, the debt of Ferrellgas Partners LP and Ferrellgas Partners Finance Corp. will be eliminated.

About $1.5 billion of debt of the operating partnership will be refinanced, and more than $1 billion of new capital will be raised by the operating partnership.

“This agreement is an important milestone to allow us to eliminate debt overhang, strengthen our financial position and partner with our institutional noteholders that recognize the value and growth potential in our enterprise,” says Ferrell. “Importantly, this deal will permit our current management to implement the necessary business plans to grow our enterprise for the benefit of our employee-owners and other stakeholders. All of this will be accomplished without any disruption to our operations.”

Additional details regarding the TSA are included in the company’s Form 8-K filed with the Securities and Exchange Commission.

Featured image: LP Gas staff