Dallas-based Southcross Energy Partners – a master limited partnership that provides natural gas gathering, compression, treating, processing and NGL fractionation and transportation services – announced on Friday recent actions to enhance its liquidity position. Specific actions include a suspension of its quarterly cash distributions to unit holders and the closing of a $14 million unsecured loan. The unsecured loan is being provided by funds managed by EIG Global Energy Partners and Tailwater Capital and has a one-year term with interest at 7 percent per annum, payable in cash or, at the option of Southcross, in additional notes, such interest not due and payable until maturity.
David Biegler, Chairman of the board of directors of Southcross’ general partner, stated: “Given the current low commodity pricing cycle and the effect that this is having on the development plans of our producer customers, Southcross’ management and board of directors, after careful consideration, believe it is prudent for Southcross to bolster its liquidity through the suspension of the distributions and the unsecured financing and that these actions are in the best interests of the Southcross unitholders.”
John Bonn, President and Chief Executive Officer of Southcross, added: “We believe that the additional liquidity generated from the financing, coupled with the suspension of our distributions, will allow us to advance our efforts to develop a comprehensive plan that will address our balance sheet. We have retained advisors to assist in this effort.”
Southcross and its affiliate, Southcross Holdings LP have retained Kirkland & Ellis LLP, as legal advisor, and Houlihan Lokey, Inc., as financial advisor, to advise the management and boards of directors of Southcross and Holdings regarding potential strategic alternatives and capital structure matters.
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