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): January 19, 2010
CROSSTEX ENERGY, L.P.
(Exact name of registrant as specified in its charter)
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DELAWARE
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000-50067
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16-1616605 |
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(State or other jurisdiction
of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.) |
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2501 CEDAR SPRINGS
DALLAS, TEXAS
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75201 |
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(Address of principal executive offices)
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(Zip Code) |
Registrants telephone number, including area code: (214) 953-9500
(Former name or former address, if changed since last report.)
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:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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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.
Private Placement
As previously reported in a Form 8-K filed with the Securities and Exchange Commission (the
SEC) on January 11, 2009, on January 6, 2010, Crosstex Energy, L.P. (the Partnership) entered
into a privately negotiated Purchase Agreement (the Purchase Agreement) with GSO Crosstex
Holdings LLC (the Purchaser) to issue and sell 14,705,882 Series A Convertible Preferred Units
representing limited partner interests of the Partnership (the Series A Preferred Units).
Pursuant to the terms of the Purchase Agreement, the Series A Preferred Units were issued and sold
by the Partnership to the Purchaser on January 19, 2010.
Registration Rights Agreement
On January 19, 2010, the Partnership entered into a Registration Rights Agreement with the
Purchaser relating to the registered resale of common units representing limited partner interests
of the Partnership (Common Units) issuable upon conversion of the Series A Preferred Units.
Pursuant to the Registration Rights Agreement, the Partnership has agreed to file a shelf
registration statement for the resale of the Common Units into which the Series A Preferred Units
may convert as soon as practicable following receipt of written notice from the Purchaser
requesting the filing of such shelf registration statement. Moreover, the Partnership has agreed
to use commercially reasonable efforts to cause the shelf registration statement to be declared
effective by the SEC no later than 180 days after filing such shelf registration statement.
Board Representation Agreement
On January 19, 2010, the Partnership, Crosstex Energy GP, L.P., its general partner (the
General Partner), Crosstex Energy GP, LLC, the general partner of the General Partner (the
Company) and Crosstex Energy, Inc., the parent of the Company (CEI), entered into a Board
Representation Agreement (the Board Representation Agreement) with the Purchaser. Pursuant to
the Board Representation Agreement, each of the Partnership, the General Partner, the Company and
CEI agreed to take all actions necessary or advisable to cause one director serving on the Board of
Directors of the Company (the Board) to be designated by the Purchaser, in its sole discretion.
Such designation right will terminate upon the earliest to occur of (i) the Purchaser and its
affiliates holding a number of Series A Preferred Units and Common Units issued on conversion of
the Series A Preferred Units that is less than twenty-five percent (25%) of the number of Series A
Preferred Units initially issued to the Purchaser pursuant to the Purchase Agreement, (ii) such
time as the sum of (A) the number of Common Units into which the Series A Preferred Units
collectively held by the Purchaser and its affiliates are convertible and (B) the number of the
Common Units issuable upon conversion of the Series A Preferred Units which are then collectively
held by the Purchaser and its affiliates represent less than ten percent (10%) of the Common Units
then outstanding and (iii) the Purchaser ceasing to be an affiliate of The Blackstone Group L.P.
Prior to the termination of the designation right, such director may be removed by the Purchaser at
any time, and by a majority of the other directors then serving on the Board for cause.
The foregoing descriptions of the Registration Rights Agreement and the Board Representation
Agreement do not purport to be complete and are qualified in their entirety by reference to the
complete text of the Registration Rights Agreement and the Board Representation Agreement, copies
of which are filed as Exhibits to this Current Report on Form 8-K and are incorporated herein by
reference.
Item 3.02. Unregistered Sales of Equity Securities.
Pursuant to the terms of the Purchase Agreement, the Series A Preferred Units were issued and
sold by the Partnership on January 19, 2010 to the Purchaser for a cash purchase price of $8.50 per
Series A Preferred Unit, resulting in total gross proceeds of approximately $125 million. Net
proceeds to the Partnership, including the General Partners proportionate capital contribution and
after deduction of the fees and expenses related to the private
placement, including a 3% fee paid to the Purchaser, were
approximately $123.5 million.
The Series A Preferred Units were issued and sold in a private transaction exempt from
registration under Section 4(2) of the Securities Act of 1933, as amended (the Securities Act),
and certain rules and regulations promulgated under that section. The Purchaser has represented in
the Purchase Agreement that it is an accredited investor within the meaning of Rule 501 under the
Securities Act and that such Purchaser is acquiring the Series A Preferred Units for its own
account for investment purposes and not with a view to distributing such Series A Preferred Units
in violation of any securities laws. In addition, each Purchaser agreed that it understands that
the Series A Preferred Units must not be sold or otherwise disposed of except pursuant to an
effective registration statement under the Securities Act or under an exemption from such
registration.
The text in Item 5.03 of this Current Report on Form 8-K regarding the Partnership Agreement
Amendment is incorporated into this item by reference.
Item 3.03. Material Modification to Rights of Securities Holders.
On January 19, 2010, the Partnership issued the Series A Preferred Units pursuant to the
Purchase Agreement, which Series A Preferred Units have certain rights that are senior to the
rights of holders of Common Units, such as the rights to distributions and rights upon liquidation
of the Partnership. In addition, on January 19, 2010, the Partnership entered into the
Registration Rights Agreement with the Purchaser relating to the registered resale of the Common
Units issuable upon conversion of the Series A Preferred Units purchased pursuant to the Purchase
Agreement. The general effect of the issuance of these transactions upon the rights of the holders
of Common Units is more fully described in Items 1.01 and 5.03 of this Current Report on Form 8-K,
which are incorporated in this Item 3.03 by reference.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain Officers.
On January 19, 2010, the Board appointed D. Dwight Scott as a director of the Board. Mr.
Scott was selected as a director pursuant to the Board Representation Agreement described above.
Mr. Scott is a Senior Managing Director of GSO Capital Partners
and head of GSOs Houston Office. Mr. Scott focuses on investments in the energy and power
markets and is a member of GSOs Investment Committee. Before
joining GSO in 2005, Mr. Scott was
an Executive Vice President and Chief Financial Officer of El Paso Corporation (NYSE: EP). Prior
to joining El Paso, Mr. Scott served as a managing director in the energy investment banking
practice of Donaldson, Lufkin & Jenrette. Mr. Scott earned a BA from the University of North
Carolina at Chapel Hill and a MBA from The University of Texas at Austin. He is currently a
Director of Cheniere Energy, Inc. (AMEX: LNG), Crestwood Midstream Partners, MCV Investors, Inc.,
SandRidge Energy, Inc. (NYSE: SD) and United Engines Holding Company, LLC. Mr. Scott is a member
of the Board of Trustees of KIPP, Inc. and the River Oaks Baptist
School.
Mr. Scott is employed by The Blackstone Group and GSO Capital Partners, which are affiliates
of the Purchaser, and which have entered into the transactions described in this Form 8-K and the
Form 8-K filed with the SEC on January 11, 2010 with the Partnership and its affiliates.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
Amendment to Partnership Agreement
On January 19, 2010, in connection with the transactions described in Items 1.01 and 3.02
above, the Partnership entered into Amendment No. 3 to the Sixth Amended and Restated Agreement of
Limited Partnership of the Partnership (the Partnership Agreement Amendment) to set forth the
terms of the Series A Preferred Units.
Under the terms of the Partnership Agreement Amendment, commencing with the quarter ending on
March 31, 2010, the Series A Preferred Units will receive quarterly distributions (Series A
Quarterly Distributions) in an amount equal to the greater of (a) the amount of aggregate
distributions that would be payable had such Series A Preferred Units converted into Common Units
and (b) a fixed rate of 0.025 multiplied by the conversion price, which will initially be $8.50 per
Series A Preferred Unit (subject to customary anti-dilution adjustments) (the Conversion Price),
paid in arrears within 45 days after the end of each quarter and prior to any other distributions
are made with respect to the Common Units. Such distributions may be paid in cash, in additional
Series A Preferred Units issued in kind or any combination thereof, as determined by the
Partnership in its sole discretion. The Partnership will not pay any distribution with respect to
any Common Units in any quarter in which the Series A Preferred Units do not receive a Series A
Quarterly Distribution in full in cash. The record date for the determination of holders entitled
to receive Series A Quarterly Distributions will be the same as the record date for determination
of Common Unit holders entitled to receive quarterly distributions.
If the Partnership fails to pay in full any Series A Quarterly Distribution, the amount of
such unpaid distribution will accrue and accumulate from the last day of the quarter for which such
distribution is due until paid in full.
The Series A Preferred Units have voting rights that are identical to the voting rights of the
Common Units and shall vote with the Common Units as a single class, with each Series A Preferred
Unit entitled to one vote for each Common Unit into which such Series A Preferred Unit is
convertible. The Series A Preferred Units will have class voting rights on any matter,
including a merger, consolidation or business combination, that adversely affects, amends or
modifies any of the rights, preferences, privileges or terms of the Series A Preferred Units.
The Series A Preferred Units are convertible in whole or in part into Common Units at any time
at the holders election. The number of Common Units into which a Series A Preferred Unit is
convertible will be an amount equal to (i) the sum of $8.50 and all accrued and accumulated but
unpaid distributions, divided by (ii) the Conversion Price, which will initially be $8.50 per
Series A Preferred Unit (subject to customary anti-dilution adjustments).
Commencing on January 19, 2013, the Partnership will have the right at any time to convert all
or part of the Series A Preferred Units then outstanding, provided that (i) the daily
volume-weighted average trading price of the Common Units on the national exchange on which the
Common Units are listed or admitted to trading must be greater than 150% of the then-applicable
conversion price for 20 out of the trailing 30 days ending on two trading days before the date on
which the Partnership delivers notice of such conversion, and (ii) the average daily trading volume
of Common Units on such national exchange must have exceeded 250,000 Common Units for 20 out of the
trailing 30 trading days ending on two trading days before the date on which the Partnership
delivers notice of such conversion.
Until the earliest to occur of (i) the Purchaser and its affiliates holding a number of Series
A Preferred Units and Common Units issued on conversion of the Series A Preferred Units that is
less than twenty-five percent (25%) of the number of Series A Preferred Units initially issued to
the Purchaser pursuant to the Purchase Agreement, (ii) such time as the sum of (A) the number of
Common Units into which the Series A Preferred Units collectively held by the Purchaser and its
affiliates are convertible and (B) the number of the Common Units issuable upon conversion of the
Series A Preferred Units which are then collectively held by the Purchaser and its affiliates
represent less than ten percent (10%) of the Common Units then outstanding and (iii) the Purchaser
ceasing to be an affiliate of The Blackstone Group L.P., the holders of the Series A Preferred
Units will have a right of first refusal to purchase any securities issued by the Partnership that
rank pari passu with the Series A Preferred Units.
Upon any liquidation and winding up of the Partnership or the sale of substantially all of the
assets of the Partnership, the holders of Series A Preferred Units generally will be entitled to
receive, in preference to the holders of any of the Partnerships other securities, an amount equal
to the greater of (a) the sum of (i) the Conversion Price multiplied by the number of Series A
Preferred Units owned by such holders, plus (ii) all accrued but unpaid distributions on such
Series A Preferred Units or (b) the amount of aggregate distributions that would be payable had
such Series A Preferred Units converted into Common Units.
Amendment to LLC Agreement
On January 19, 2010, in connection with the Board Representation Agreement described in Item
1.01 above, the Company entered into Amendment No. 1 to its Amended and Restated Limited Liability
Company Agreement (the LLC Agreement Amendment) to provide for the Purchasers right to designate
a member of the Board.
The foregoing descriptions of the Partnership Agreement Amendment and the LLC Agreement
Amendment do not purport to be complete and are qualified in their entirety by reference to the
complete text of the Partnership Agreement Amendment and the LLC Agreement Amendment, copies of
which are filed as Exhibits to this Current Report on Form 8-K and are incorporated herein by
reference.
Item 7.01. Regulation FD Disclosure.
On January 19, 2010, the Partnership issued a press release announcing that it has completed
its sale of its gathering and treating assets in East Texas for $40 million to Waskom Gas
Processing Company. A copy of the press release is furnished as Exhibit 99.1 to this Current
Report on Form 8-K.
On January 20, 2010, the Partnership issued a press release announcing that it has completed
its sale of the Series A Preferred Units to the Purchaser. A copy of the press release is
furnished as Exhibit 99.2 to this Current Report on Form 8-K.
In accordance with General Instruction B.2 of Form 8-K, the information set forth in this Item
7.01 and in the attached Exhibits 99.1 and 99.2 shall be deemed to be furnished and not be deemed
to be filed for purposes of the Securities and Exchange Act of 1934, as amended.
Item 9.01. Financial Statements and Exhibits.
In accordance with General Instruction B.2 of Form 8-K, the information set forth in the
attached Exhibits 99.1 and 99.2 is deemed to be furnished and shall not be deemed to be filed for
purposes of Section 18 of the Exchange Act.
(d) Exhibits.
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EXHIBIT |
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NUMBER |
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DESCRIPTION |
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3.1 |
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Amendment No. 3 to Sixth Amended and Restated
Agreement of Limited Partnership of Crosstex
Energy, L.P., dated as of January 19, 2010. |
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3.2 |
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Amendment No. 1 to Amended and Restated Limited
Liability Company Agreement of Crosstex Energy GP,
LLC, dated as of January 19, 2010. |
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4.1 |
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Registration Rights Agreement, dated as of January
19, 2010, by and among Crosstex Energy, L.P. and
GSO Crosstex Holdings LLC. |
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10.1 |
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Board Representation Agreement, dated as of
January 19, 2010, by and among Crosstex Energy GP,
LLC, Crosstex Energy GP, L.P., Crosstex Energy,
L.P., Crosstex Energy, Inc. and GSO Crosstex
Holdings LLC. |
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99.1 |
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Press release dated January 19, 2010. |
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99.2 |
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Press release dated January 20, 2010. |
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 hereunto duly authorized.
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CROSSTEX ENERGY, L.P.
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By: |
Crosstex Energy GP, L.P., its General Partner |
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By: |
Crosstex Energy GP, LLC, its General Partner |
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Date: January 22, 2010 |
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/s/ William W. Davis
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William W. Davis |
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Executive Vice President and
Chief Financial Officer |
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INDEX TO EXHIBITS
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EXHIBIT |
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NUMBER |
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DESCRIPTION |
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3.1 |
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Amendment No. 3 to Sixth Amended and Restated
Agreement of Limited Partnership of Crosstex
Energy, L.P., dated as of January 19, 2010. |
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3.2 |
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Amendment No. 1 to Amended and Restated Limited
Liability Company Agreement of Crosstex Energy GP,
LLC, dated as of January 19, 2010. |
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4.1 |
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Registration Rights Agreement, dated as of January
19, 2010, by and among Crosstex Energy, L.P. and
GSO Crosstex Holdings LLC. |
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10.1 |
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Board Representation Agreement, dated as of
January 19, 2010, by and among Crosstex Energy GP,
LLC, Crosstex Energy GP, L.P., Crosstex Energy,
L.P., Crosstex Energy, Inc. and GSO Crosstex
Holdings LLC. |
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99.1 |
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Press release dated January 19, 2010. |
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99.2 |
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Press release dated January 20, 2010. |