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EX-99.1 - Breitburn Energy Partners LP | v173613_ex99-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE
OF REPORT (DATE OF EARLIEST EVENT REPORTED)
February
9, 2010 (February 3, 2010)
BREITBURN
ENERGY PARTNERS L.P.
(Exact
name of Registrant as specified in its charter)
Delaware
(State
or other jurisdiction of
incorporation
or organization)
|
001-33055
(Commission
File
Number)
|
74-3169953
(I.R.S.
Employer
Identification
No.)
|
515
South Flower Street, Suite 4800
Los
Angeles, CA 90071
(Address
of principal executive office)
(213)
225-5900
(Registrant’s
telephone number, including area code)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
ITEM
1.01 Entry Into a Material Definitive Agreement
On February 3, 2010, BreitBurn Energy
Partners L.P., a Delaware limited partnership (the “Partnership” or
“BreitBurn”), Quicksilver Resources Inc. ("Quicksilver") and
Provident Energy Trust (“Provident”) agreed to settle all claims (the
“Settlement”) with respect to the litigation filed by Quicksilver against the
Partnership, its general partner, BreitBurn GP, LLC (the "General Partner"),
certain of its subsidiaries and directors and Provident pending in the 48th
District Court in Tarrant County, Texas (the "Court"). The terms of
the Settlement will be set forth in a definitive settlement agreement which we
intend to file after it is executed. The description set forth below of the
Settlement is qualified in its entirety by reference to such settlement
agreement. We expect the terms of the Settlement to become
effective upon the dismissal of the lawsuit in Texas in early April
2010. The parties have agreed to dismiss all pending claims before
the Court and have mutually released each party, its affiliates, agents,
officers, directors and attorneys from any and all claims arising from the
subject matter of the pending case before the Court. The Partnership
has also agreed to pay Quicksilver $13 million and expects this amount to be
paid by insurance. However, discussions with the Partnership’s insurers are
ongoing. Provident has agreed to a separate settlement
amount. Other terms of the Settlement are summarized
below:
Reinstatement
of Distributions.
The Partnership intends to reinstate
quarterly cash distributions at the rate of $.375 per common unit of the
Partnership (“Common Unit”), or $1.50 on an annual basis, beginning with the
first quarter of 2010 to be paid in the second quarter, provided that the
coverage ratio is no less than 1.2.
Designation,
Nomination and Election of Directors; Management.
There
will be six members serving on the Board of Directors (the “Board”) of the
General Partner, as there are now. Mr. Halbert S. Washburn and Mr.
Randall H. Breitenbach will resign from the
Board of the General Partner. The other four members currently
serving on the Board, all of whom are independent, will continue as
directors. Subject to Board appointment, Mr. John Butler, a current
independent member of the Board of the General Partner, will replace Mr.
Washburn as Chairman of the Board. The Board of the General Partner
will appoint two new directors designated by Quicksilver, one of whom will
qualify as an independent director and one of whom will be a current independent
board member now serving on the board of directors of Quicksilver, provided
however, that such director will not be a member of Quicksilver’s
management. The initial designees will be agreed on at the time of settlement.
The new directors each will be categorized for election
purposes. One director will be in Class II, up for election by the
unitholders in 2010, and one will be in Class III, up for election by the
unitholders in 2011. The Class I directors will also be up for
election in 2010. The Board will nominate the directors designated by
Quicksilver (or such substitutes as Quicksilver may designate), each of whom
must meet the standards set forth above, as part of the slate of directors
nominated by the Board at future elections by unitholders. The total
number of members serving on the Board will not be increased without
Quicksilver’s consent. Quicksilver will vote in favor of the slate of
directors nominated by the Board. The number of directors that may be
designated by Quicksilver as described above will be reduced if Quicksilver’s
ownership percentage of Common Units is reduced. At such time as
Quicksilver owns fewer than 10% of the Common Units but at least 2,638,500
Common Units, one of the directors selected by Quicksilver will resign, or if
the director’s term is expiring, not stand for reelection, at the next annual
meeting. At such time as Quicksilver owns fewer than 2,638,500 Common
Units, the remaining director designated by Quicksilver will resign, or if the
director’s term is expiring at the next annual meeting, such director will not
stand for reelection. Certain other provisions with respect to the
Board and governance will also terminate upon Quicksilver owning less than 10%
of the Common Units.
In
addition, Mr. Breitenbach will be appointed to the office of President of the
General Partner, and will resign as Co-Chief Executive Officer. Mr.
Washburn will remain as Chief Executive Officer.
Voting
Rights.
Subject to certain exceptions,
Quicksilver will accept and agree not to challenge the voting rights as set
forth in the original Amendment No. 1 to the Partnership’s Limited
Partnership Agreement, as amended, (the “Partnership Agreement”) dated
June 17, 2008. BreitBurn will agree not to effect any amendment to
the Partnership Agreement that would restrict in any manner Quicksilver’s rights
to vote any or all of its Common Units in the election of directors or any other
matters presented to the unitholders. BreitBurn will withdraw the
Revised Amendment No. 1 dated December 29, 2009 and will not propose or adopt
any new amendment, provision, resolution, or change that would limit, deprive,
or restrict Quicksilver’s right to vote all its units, one vote per unit, on any
matter except as provided in this Settlement. Quicksilver will
support and, if necessary, vote to approve, all amendments to the Partnership
Agreement, the General Partner’s Limited Liability Company Agreement, and all
related agreements solely necessary to implement the terms of this
Settlement.
2
With respect to Common Units currently
owned by Quicksilver, and any Common Units or other voting securities received
pursuant to a distribution, reclassification or reorganization involving
BreitBurn or its Common Units or other voting securities, the Board will
permanently and irrevocably waive the 20% voting cap for the election of
directors as applicable to Quicksilver, subject to the terms of the
Settlement.
Quicksilver will vote in favor of the
slate of directors nominated by the Board. With respect to any
proposal to remove the General Partner, Quicksilver may not vote a proportion of
its Common Units in favor of removal which exceeds the proportion of the Common
Units voted in favor of such proposal by unitholders other than Quicksilver as
compared to all Common Units held by unitholders other than
Quicksilver.
Quicksilver
Standstill.
In
addition, until Quicksilver owns less than 10% of the Common Units, it has
agreed to a standstill agreement.
a. Pursuant
to the standstill, Quicksilver will be prohibited from:
(i)
engaging in any hostile or takeover activities (including tender offers;
soliciting proxies or written consents - other than as recommended by
the Board);
(ii)
acquiring or proposing to acquire additional Common Units, securities or
properties of BreitBurn, except pursuant to a distribution, reclassification or
reorganization involving BreitBurn or its Common Units or other securities
approved by the Board;
(iii)
calling a special meeting of the unitholders; or
(iv)
proposing to remove the General Partner or voting for removal of the General
Partner other than in accordance with the exception set forth above under “Voting Rights.”
b. Without
the prior written consent of BreitBurn, Quicksilver will not, directly or
indirectly:
(i) acquire
any securities or property of BreitBurn (or its affiliates), except pursuant to
a distribution, reclassification or reorganization involving BreitBurn or its
Common Units or other securities approved by the Board;
(ii) propose
to enter into (directly or indirectly) any merger, consolidation,
recapitalization, business combination, partnership, joint venture or similar
transaction involving BreitBurn (or its affiliates), except as permitted in the
Settlement;
(iii) make or
in any way participate in any “solicitation” of “proxies” (as such terms are
used in the Securities and Exchange Commission proxy rules) or written consents
to vote, seek to influence or advise others with respect to the voting of any
voting securities of BreitBurn (or its affiliates);
(iv) form,
join or participate in a “group” (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934) with respect to any voting securities of
BreitBurn (or its affiliates);
3
(v) act to
seek to control or influence the management, Board or policies of BreitBurn
except through Quicksilver’s Board designees or as provided below;
(vi) propose
to remove the General Partner or, other than in accordance with voting
restrictions set forth above under ‘Voting Rights,’ vote to remove the General
Partner;
(vii) publicly
disclose any intent, plan or arrangement inconsistent with the Settlement;
or
(viii) advise,
assist or encourage others in connection with the above.
c. Quicksilver
will agree not to sell or transfer its Common Units without the prior written
consent of BreitBurn, except:
(i) to a
party that would not own more than 20% of the outstanding Common Units after
such transfer;
(ii) in
connection with a business combination approved by the Board and/or the
Partnership’s unitholders;
(iii) in a
pledge of any voting securities to a financial institution or brokerage firm;
or
(iv) in an
underwritten offering where the Common Units will be widely distributed or would
not result in any purchaser in such offering owning more than 20% of the
outstanding Common Units after the offering
d. The
foregoing provisions shall not, and are not intended to:
(i) prohibit
Quicksilver from privately communicating with, including making any offer or
proposal to, the Board;
(ii) restrict
in any manner how Quicksilver votes its Common Units, except as provided above
in “Voting
Rights;”
(iii) restrict
the manner in which Quicksilver’s designees to the Board (A) may vote on any
matter submitted to the Board or the unitholders, or (B) participate in
deliberations or discussions of the Board (including making suggestions or
raising issues to the Board) in their capacity as members of the Board, or (C)
may take actions required by their exercise of legal duties and obligations as
members of the Board or refrain from taking any action prohibited by their legal
duties and obligations as members of the Board; or
(iv) restrict
Quicksilver from selling or transferring any of its Common Units to any
affiliate or successor of Quicksilver which agrees to be bound by the standstill
agreement.
e. The
provisions set forth above shall immediately and automatically be suspended upon
the increase or acceleration of a material financial obligation of BreitBurn
that results from the breach of a material provision thereof or the occurrence
of a material event of default thereunder, unless such breach is caused solely
by the action or inaction of Quicksilver or its nominated
directors.
Registration
Rights
Quicksilver
will have piggyback rights and an option to participate in any equity offerings
of the Partnership’s Common Units up to 20% of the total equity offered for
sale. The registration rights agreement dated November 1, 2007
between the Partnership and Quicksilver will terminate on the date on which
Quicksilver is no longer an Affiliate (as defined in that registration rights
agreement) of BreitBurn.
4
Item
7.01 Regulation FD Disclosure.
On
February 8, 2010, BreitBurn Energy Partners L.P. (the "Partnership") issued a
press release regarding the Settlement. A copy of the press release
is furnished and attached as Exhibit 99.1 to this Current Report on Form
8-K and is incorporated herein by reference.
In
accordance with General Instruction B.2 of Form 8-K, the information set forth
in this Item 7.01 and in Exhibit 99.1 shall not be deemed to be “filed” for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), or otherwise subject to the liabilities of that section, unless
the Partnership specifically states that the information is to be considered
“filed” under the Exchange Act or incorporates it by reference into a filing
under the Exchange Act or the Securities Act of 1933, as amended.
Item 9.01. Financial Statements
and Exhibits.
(d)
|
Exhibits
|
||||||
99.1
|
BreitBurn
Energy Partners L.P. press release dated February 8,
2010.
|
||||||
5
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
BREITBURN
ENERGY PARTNERS L.P.
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|||
By:
|
BREITBURN
GP, LLC,
|
||
its
general partner
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Dated:
February 9, 2010
|
By:
|
/s/
Gregory C. Brown
|
|
Gregory
C. Brown
|
|||
General
Counsel and Executive Vice
President
|
6
EXHIBIT INDEX
Exhibit
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Number
|
Exhibit
Title
|
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99.1
|
BreitBurn
Energy Partners L.P. press release dated February 8,
2010.
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7