Breitburn Energy Partners LP (NASDAQ:BBEP) announced that it has elected to suspend the declaration of any further distributions on its 8.25% Series A Cumulative Redeemable Perpetual Preferred Units (NASDAQ:BBEPP) and 8% Series B Perpetual Convertible Preferred Units and to defer an interest payment of approximately $33.5 million due today on its 7.875% senior notes due April 2022 (the “2022 Notes”) and an interest payment of approximately $13.2 million on its 8.625% senior notes due October 2020 (the “2020 Notes” and, together with the 2022 Notes, the “Notes”). Under the terms of the indentures governing the 2020 Notes and 2022 Notes, the company has a 30-day grace period after the interest payment date before an event of default occurs.
Breitburn can elect to make the interest payments due under the Notes at any time during the grace period. However, if Breitburn decides not to make such interest payments by the end of the grace period, such failure constitutes, with respect to each series of Notes, an “Event of Default” and also results in a cross-default under Breitburn’s revolving credit facility and its 9.25% Senior Secured Second Lien Notes due May 2020. Failure to make an interest payment for either Note by the end of the grace period also results in the Trustee under the related indenture or the holders of at least 25% in aggregate principal amount of the then outstanding Notes having the right to accelerate the repayment of the principal amounts due under each series of Notes.
Breitburn has elected to utilize the grace period for the Notes as part of its process to explore strategic alternatives to strengthen its balance sheet and maximize the value of Breitburn. Additionally, it has initiated discussions with its secured debtholders related to alternatives to improve Breitburn’s long-term capital structure. Breitburn has retained Lazard Frères & Co. LLC as its financial advisor and Weil, Gotshal & Manges LLP as its legal advisor to assist the Board of Directors and the management team with the strategic review process. In addition, Jefferies LLC will provide Breitburn with corporate and financial advisory services. (Original Source)
Shares of Breitburn Energy are falling nearly 18% to $0.50 in pre-market trading. BBEP has a 1-year high of $6.87 and a 1-year low of $0.46. The stock’s 50-day moving average is $0.70 and its 200-day moving average is $1.22.
BreitBurn Energy Partners LP engages in the business of acquisition, exploitation and development of oil and gas properties. Its assets consists of producing and non-producing crude oil and natural gas reserves. The company was founded on March 23, 2006 and is headquartered in Los Angeles, CA.