PetroLogistics LP (PDH), a producer of propylene, said on Tuesday it and PetroLogistics Finance (collectively referred to as the Issuers) are soliciting consents from holders of the Issuers’ outstanding 6.25% Senior Notes due 2020 to approve amendments to the indenture relating to the Notes.
The Issuers are making the consent solicitation at the request and expense of Flint Hills Resources, LLC, a subsidiary of Koch Industries.
On May 27, 2014, PetroLogistics LP and its general partner entered into a definitive agreement to be acquired by Flint Hills (the Merger).
PetroLogistics LP said that the proposed amendments would amend Section 4.03 of the indenture to replace the requirement that PetroLogistic LP file reports with the Securities and Exchange Commission with a requirement that the company provide holders of the Notes with a specified set of information that is more typical of debt securities issued in a Rule 144A-for-life transaction.
The Proposed Amendments would also amend Section 5.01(a) of the Indenture to remove the prohibition on the consolidation or merger of PetroLogistics Finance with or into an entity that is not a corporation.
According to the statement, Flint Hills will make a cash payment of $5.00 per $1,000 in aggregate principal amount of Notes held by each holder of Notes as of the record date who has validly delivered its consent prior to the expiration time and who has not validly revoked its consent before the earlier of the effective time and 5:00 p.m., New York City time, on July 2, 2014, with 25% of such consent payment to be paid promptly following the expiration time.
The remaining 75% (the Final Consent Payment) will be paid promptly following the satisfaction or waiver by Flint Hills of certain conditions, including consummation of the Merger.
Subject to obtaining required regulatory approvals and the satisfaction or waiver of other specified conditions, and based on the information currently available, the Merger is expected to be consummated by November 27, 2014.
Flint Hills has informed the Issuers that, in connection with the Merger, it intends to effect an internal restructuring of PetroLogistics LP and its subsidiaries.
Flint Hills will also provide PetroLogistics LP with a new unsecured pari passu revolving credit facility, replacing the existing secured structurally senior facility, contribute a demand note to PetroLogistics LP and put in place other arrangements that will effectively support the Issuers’ obligation to pay principal and interest on the outstanding Notes.
Petrologistics LP’s share price was unchanged during Tuesday’s pre-market trading session at $14.39. This is towards the upper end of the company’s 52-week range, which has seen a share price high of $14.45 and a low of $10.37.