A Squire Patton Boggs team led by Stephen D. Lerner and Edward J. Newberry has advised Ferrellgas Partners, L.P. and Ferrellgas, L.P. (Ferrellgas) in the successful completion of their previously announced $US2+ billion restructuring and refinancing plan that will strengthen the company’s balance sheet while allowing it to continue operating as an employee-owned enterprise.
“We are proud that Jim Ferrell and Ferrellgas put their trust in us to guide Ferrellgas through this complex and challenging restructuring - not only were thousands of jobs at stake, but the preservation of the company’s ESOP as well,” said Mr. Lerner, Global Chair of the Restructuring & Insolvency Practice. “Through a creative, strategic plan in which existing equity was preserved, we worked with Ferrellgas and their other advisors to place them on a strong footing for positive financial returns.”
The Squire Patton Boggs team worked with Ferrellgas to develop and execute an innovative and aggressive strategy that rejected traditional approaches to corporate restructurings and preserved both common equity and Ferrellgas’ ESOP. Moreover, the restructuring allowed Ferrellgas to achieve the goals set by the Board in 2019, including emergence from the process with an industry-best debt leverage ratio, and has positioned Ferrellgas to be the leading player in the steadily consolidating propane industry.
In December 2020, Ferrellgas entered into a Transaction Support Agreement (TSA) with the holders of US$357 million of senior notes that provided for a comprehensive restructuring of the publicly-traded parent (Ferrellgas Partners, L.P.) to address the maturity of its notes and a complete refinancing of more than US$2 billion in debt at the operating company (Ferrellgas, L.P.). The parent restructuring was accomplished through a pre-packaged chapter 11 plan in the United States Bankruptcy Court for the District of Delaware. The plan was approved by Bankruptcy Judge Mary Walrath who commented that the preservation of existing equity, while not repaying all debt in full, was “unheard of.”
Simultaneously with the completion of the pre-packaged chapter 11 plan, the operating company successfully entered into a new US$350 million senior secured revolving credit facility; issued US$1.475 billion in new senior unsecured notes due in 2026 and 2029, and sold US$700 million in senior preferred equity. The proceeds of these transactions was used to satisfy, in full, all existing operating company debt obligations.
Established nearly 100 years ago, Ferrellgas is known for its leading tank exchange business, Blue Rhino, as well as deliveries of propane to customers or retailers in all 50 states, plus the District of Columbia and Puerto Rico.
The Squire Patton Boggs team representing Ferrellgas was led by Ed Newberry, long-time advisor to Ferrellgas and its CEO and Chairman Jim Ferrell, and consisted of Restructuring lawyers led by Stephen Lerner, together with Jeffrey N. Rothleder, Scott A. Kane, Christopher J. Giaimo, Maura P. McIntyre and Emily Shandruk; Securities, Debt Financing and Corporate lawyers led by Aaron Seamon, Patrick Burke and Ed Steiner, together with JoEllen Minchak, James Schneider, Haitao Zhang, and Tax lawyers led by Steve Mount, together with Max Van Benschoten.