We advised a group of prepetition unsecured noteholders on the restructuring and issuance of preferred units

Davis Polk advised a group of holders of prepetition 8.625% senior unsecured notes due 2020 (the “2020 Notes”) in connection with a restructuring of Ferrellgas Partners, L.P. and its subsidiaries (collectively, the “Company”), as well as the issuance of $700 million of new-money senior preferred units by Ferrellgas Partners’ operating subsidiary, Ferrellgas L.P. Negotiations between the Company and the 2020 Notes group represented by Davis Polk originally began in 2018 and culminated in a comprehensive Transaction Support Agreement entered into on December 10, 2020, by Ferrellgas Partners, its subsidiaries, certain of its owner-affiliates and noteholders holding approximately 74% of the $357 million outstanding amount of 2020 Notes. 

The Transaction Support Agreement contemplated both an in-court restructuring of Ferrellgas Partners through a pre-packaged chapter 11 bankruptcy to effectuate a debt-to-equity conversion of the 2020 Notes into new Class B common units of Ferrellgas Partners, and a simultaneous out-of-court refinancing of approximately $2.2 billion of outstanding funded indebtedness issued by Ferrellgas L.P. The new Class B units are entitled to a minimum of 86% of all common unit distributions of the reorganized company up to $357 million in distributions, at which point they will convert into a percentage of ordinary Class A common units with the conversion percentage increasing over time. The Ferrellgas Partners has a five-year right to redeem the Class B units at a return premium. Ferrellgas Partners’ existing equityholders retained their existing common (Class A) units, subject to dilution by the Class B units’ conversion feature. All other claims were rendered unimpaired. On March 15, 2021, Ferrellgas Partners’ plan of reorganization, which Davis Polk played a leading role in structuring and negotiating, was confirmed by the Honorable Mary F. Walrath of the Bankruptcy Court for the District of Delaware, and Ferrellgas Partners emerged from bankruptcy on March 30, 2021.  

The approximately $2.5 billion refinancing at Ferrellgas L.P. (which did not file for chapter 11), was consummated simultaneously with Ferrellgas Partners’ emergence from chapter 11 on March 30, 2021, and included (i) entry into a new $350 million revolving credit facility, (ii) issuance of $1.475 billion of new unsecured notes and (iii) issuance of $700 million in new senior preferred units of Ferrellgas LP. The Transaction Support Agreement between the Company and the 2020 Notes group provided holders of 2020 Notes with the right to purchase 35% of the new preferred units, and Davis Polk negotiated the terms of the new senior preferred units on behalf of the participating holders of 2020 Noteholders.

Ferrellgas Partners, L.P. is a publicly-traded master limited partnership and one of the nation’s largest retail marketers and leading distributors of propane and related accessories to residential, industrial and agricultural customers throughout the United States.

The Davis Polk restructuring team includes partners Damian S. Schaible and Angela M. Libby and associates Jonah A. Peppiatt, Jinhe Hu and David Kratzer. The finance team includes counsel Christian Fischer. The corporate team includes partner Darren M. Schweiger and associate Nicolas R. Yamagata. The litigation team includes partner James I. McClammy. The tax team includes partner William A. Curran and associate Elina Khodorkovsky. All members of the Davis Polk team are based in the New York office.

Copy link to share post