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): May 10, 2000
GENESIS ENERGY, L.P.
(Exact name of registrant as specified in its charter)
Delaware 1-12295 76-0513049
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
500 Dallas, Suite 2500, Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
(713) 860-2500
(Registrant's telephone number, including area code)
Item 5. Other Events.
On May 10, 2000, Genesis Energy, L.P. announced that based on the
recommendation of the Special Committee appointed by its general partner, the
general partner and the Board of Directors of the general partner unanimously
approved a proposed financial restructuring of the partnership. The proposed
restructuring, which is described in the press release filed as Exhibit 99.1
hereto, is subject to approval by holders of a majority of the partnership's
outstanding public common units.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
The following materials are filed as exhibits to this Current Report on
Form 8-K.
Exhibit.
99.1 Press release of Genesis Energy, L.P. dated May 10, 2000.
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.
GENESIS ENERGY, L.P.
(A Delaware Limited Partnership)
By: GENESIS ENERGY, L.L.C., as
General Partner
Date: May 11, 2000 By: /s/ Ross A. Benavides
----------------------------------
Ross A. Benavides
Chief Financial Officer
FOR IMMEDIATE RELEASE
Contact: Ross A Benavides
Chief Financial Officer
(713) 860-2528
GENESIS ENERGY, L.P.
ANNOUNCES PROPOSED RESTRUCTURING
May 10, 2000 - Genesis Energy, L.P. (NYSE:GEL) announced today that based
on the recommendation of the Special Committee appointed by the general partner,
the general partner and the Board of Directors of the general partner of Genesis
unanimously approved a proposed financial restructuring of the partnership. The
proposal for a financial restructuring of the partnership is subject to approval
by holders of a majority of Genesis Energy, L.P.'s outstanding public common
unitholders. Assuming unitholder approval, we expect the proposed restructuring
to be effective beginning with distributions for the third quarter of 2000.
Under the terms of the restructuring, Genesis will set the minimum
quarterly distribution at $0.20 per unit, a level that is commensurate with
Genesis' current and anticipated future cash flow. The current minimum
quarterly distribution is $0.50 per unit. In addition to this change:
-Salomon Smith Barney Holdings Company Inc. ("Salomon") will contribute
to the operating partnership the remaining balance of its distribution
support obligation;
-Genesis will make a special distribution to all common unitholders of
the remaining distribution support obligation reduced by the amount of
costs associated with the proposed restructuring;
-the general partner will relinquish its two percent share of the special
distribution and any rights to incentive distributions that it may have
in connection with such special distribution;
-all outstanding subordinated limited partnership units of the operating
limited partnership will be eliminated, thereby increasing the common
unitholders' effective combined ownership of the partnership from the
current 80% to 98% and eliminating the requirement that common units
accrue arrearages;
-Salomon will relinquish all of its $17.6 million of additional limited
partner interests received for meeting its distribution support
obligation;
-the respective per unit distribution thresholds that must be achieved
before the general partner is entitled to incentive distributions will
be set at 125%, 140% and 165% of the minimum quarterly distribution,
or $0.25, $0.28 and $0.33 per unit; and
-Salomon will extend for one year, on the current terms and conditions,
its $300 million Master Credit Support Agreement due to expire on
December 31, 2000.
Mark J. Gorman, President of Genesis, said, "As a result of the production
declines in our primary areas of operation, we have been unable to generate
sufficient cash flow from operations to fully fund our minimum quarterly
distribution obligation on common units. We have generated $44.3 million of
distributable cash flow since our inception in December 1996 and have
distributed $58.5 million to our common unitholders. The shortfall has been
funded from proceeds that we retained from the initial public offering and
distribution support provided by Salomon. Prior to the end of the distribution
support period on December 31, 2001, we expect to use the entire $17.6 million
of distribution support from Salomon. Furthermore, we do not expect industry
conditions to improve enough to allow us to generate sufficient cash flow from
our existing assets to make the aggregate $17.6 million annual distribution
requirement on common units.
"After examining several options, management and the Board of Directors of
the general partner believe that the most prudent course of action is to pay out
the balance of the Salomon distribution support obligation now, reduce the
minimum quarterly distribution on common partnership units to a level that is
commensurate with our cash flow and preserve any increase in future cash flow
for the common unitholders by eliminating all outstanding subordinated limited
partnership units and the $17.6 million of additional limited partner interests
issued to Salomon in exchange for distribution support."
Mr. Gorman added, "We believe that this proposal will create a fresh start
for the partnership, enhancing the ability of the general partner to increase
the value of the unitholders' investment in Genesis. We expect that approval of
the proposal will improve our ability to access debt capital and to issue
partnership units as currency for acquisitions. Moreover, our simplified
ownership structure will enhance the potential for business combinations and
other strategic arrangements that improve unitholder value."
A Special Committee of independent members of the Board of Directors was
appointed to review the restructuring and recommended the restructuring to the
Board. Simmons & Company International, an independent investment banking firm,
has advised the Special Committee and has issued an opinion that the proposed
restructuring is fair to the common unitholders.
In connection with the proposal for restructuring, the partnership is
preparing a proxy statement containing a more detailed description of the
proposal. A definitive proxy statement will be mailed to the partnership's
unitholders asking the unitholders of record as of a record date to be
determined by the general partner to vote on the proposal at a special meeting
of the unitholders. The definitive proxy will also contain a notice to the
partnership's unitholders specifying the date and location of the special
meeting.
This press release includes forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Although Genesis believes that its expectations are based
upon reasonable assumptions, it can give no assurance that its goals will be
achieved. Important factors that could cause actual results to differ
materially from those in the forward looking statements herein include the
timing and extent of changes in commodity prices for oil, ability to obtain
adequate credit facilities, environmental risks, government regulation, the
ability of the Company to meet its stated business goals and other risks noted
from time to time in the Company's Securities and Exchange Commission filings.
